50 : 50 shareholders and other owner gives a third away .. to her husband.

[BusinessOwner2]

Hi all,
Along with other disputes in the business- that I want to sell. I was a 50/50 shareholder with my sister - she registered our shares - I have the paperwork - this is nearly 5 years ago now. Now we have a dispute I see she has registered my brother in law as a 1/3rd owner week after our initial shares were registered so now my 50% is worth 33.3%.

I did not authorise this at all, and what’s more is I put in the capital (she had a loan off the back of me putting in equity).

Can I dispute the fact this transfer / share issue was unauthorised through companies house or another party? Ideally not going through the courts.

Thank you

 

[Mark T Jones]

I'm not 100% sure what you are asking here?

You can and should dispute it if it wasn't agreed. The courts are there for when you can't reach an agreement any other way.

The first step is frank and open discussion

The critical step between that and courts is mediation eg through @The Resolver

As a question of detail, did she increase the number of shares or sub-divide them?

 

[cjd]

She can't dilute your shareholding without your consent.

 

[BusinessOwner2]

I'm not 100% sure what you are asking here?

You can and should dispute it if it wasn't agreed. The courts are there for when you can't reach an agreement any other way.

The first step is frank and open discussion

The critical step between that and courts is mediation eg through @The Resolver

As a question of detail, did she increase the number of shares or sub-divide them?

I wanted to know if it’s possible to get my share back without going to the courts eg through companies house as I never authorised this?

We had 100 shares each and then she issued him 100 shares.

 

[BusinessOwner2]

She can't dilute your shareholding without your consent.

Is there a way to contest do you know without courts eg I’ve not provided authority so companies house need to remove

 

[Newchodge]

All Companies House do is register the information they are given. If your sister will not hold a discussion you need formal help. Did you speak to @The Resolver the last time you raised this issue here?

 

[BusinessOwner2]

All Companies House do is register the information they are given. If your sister will not hold a discussion you need formal help. Did you speak to @The Resolver the last time you raised this issue here?

Do you know if this can be disputed? I haven’t spoken to the Resolver as there is no resolve to be had on the situation. I want to sell and my sister and her husband (who now have majority ownership) are completely stubborn.

 

[Newchodge]

Do you know if this can be disputed? I haven’t spoken to the Resolver as there is no resolve to be had on the situation. I want to sell and my sister and her husband (who now have majority ownership) are completely stubborn.

If you don't want to listen to advice, why ask the questions?

 

[BusinessOwner2]

If you don't want to listen to advice, why ask the questions?

I’m seeking clarity. Mediation will not work with this person im afraid.
Could I put the share holding back to the original shareholding with companies house as there was never consent to change it.

 

[Newchodge]

I’m seeking clarity. Mediation will not work with this person im afraid.
Could I put the share holding back to the original shareholding with companies house as there was never consent to change it.

Do whatever you want to do.

 

[NickGrogan]

I want to sell and my sister and her husband (who now have majority ownership) are completely stubborn.

Do you have somebody who wants to buy?

 

[cjd]

Stop messing about, find a commercial solicitor and get advice, it won't cost much. Then explain that the share issue was not lawful - call it a mistake. If she's still not prepared to talk or mediate you either have to walk away or issue a letter before action. Often that's enough to start a conversation.

 

[Daybooks]

You can dispute it if this “share issue” was not in accordance with your Company Articles. Read your Articles, available at Companies House if you don’t have a copy; if model articles were used then you can get them from the Companies House website too. That should be your starting point.

 

[Newchodge]

You can dispute it if this “share issue” was not in accordance with your Company Articles. Read your Articles, available at Companies House if you don’t have a copy; if model articles were used then you can get them from the Companies House website too. That should be your starting point.

But there is no-one, other than the sister with whom to dispute it. Uness you go to the courts which the OP does not want to do.

 

[Daybooks]

But there is no-one, other than the sister with whom to dispute it. Uness you go to the courts which the OP does not want to do.

“Can I dispute the fact this transfer / share issue was unauthorised through companies house or another party? Ideally not going through the courts.”

I was just giving a response to the question raised. “Other than the sister” is of course still someone to raise the dispute with. Establish the facts in relation to the Articles. If the OP believes it contravenes the Articles then the OP decides upon their course of action in accordance with company law, or not at all should they decide.

 

[Mark T Jones]

You really need to listen.

There are 3 paths open to you, which can be individual or used in conjunction.

1. Discussion / negotiation.

2. Mediation.

3 courts.

Nobody is going to come along and fix it for you

 

[NickGrogan]

But all of this is pointless if you want to sell and don't have anyone who wants to buy.

Selling shares in family businesses to anyone apart from family is very difficult, especially if there are existing disagreements.

Do you have somebody who wants to buy?

 

[Porky]

@BusinessOwner2
I’m sorry to read you have a dispute with family, specifically your sister, I hope you can reach a resolve.

The first point IMO is to establish the FACTS of the position here. If you think you were issued 50% of the initial share capital and your sister the same then put simply: your BIL can’t own a third unless: you and your sister both signed stock transfer forms agreeing to the sale of your shares to your BIL to give him a third OR you both signed and filed a resolution at companies house agreeing to the issue of new shares to your BIL so after dilution it worked out that you all owned a third each (to pass a resolution you need 75% of voting shareholder support) together with an SH01 filing at companies house so that he would be issued with new shares OR if neither of these events then perhaps you didn’t own half of the share stock at the initial set up.

Now, you may have done so already but go to companies house and check the filings against your limited company name to see exactly what was filed so you are clear of the facts.

If new shares were issued, what did he pay for them? You mention your shares were for investment, so did he pay the same share price or was some of your investment loan capital?

Next, moving to point 2: let’s assume that there was some miss communication during the set up of your business and it was 1/3 each at set up or your sister went ahead and issued new shares to your BIL unauthorised whatever, as stated by @Mark T Jones #16 you only have those three options open to you and the legal/courts route should really be avoided if possible or certainly as an absolute total last resort.

You can’t just go to companies house and complain, they are a filing service, you need to correct the filings with new resolutions if they are incorrect. Who is the PSC at Companies house? Is it the three of you at more than 25% each? If you pass new resolutions your fellow shareholders with you need to pass them.

Ideally, you should take emotion out of your negotiation, (I can tell you are annoyed) and sit down with your sister and discuss a resolve. If the share ownership is your issue then new additional shares could be issued so you personally own 50% again if that was the original intention. As it stands if you all own a third of the stock each unless articles agreed otherwise you are all at stalemate anyhow, you can’t sell all the equity of the business without you all agreeing to it anyhow.

Finally, as @NickGrogan #17 points out unless you have someone that wants to buy the shares, what’s the point? I do tend to agree with him. You need to decide really what you want out of this but at the end of the day, is falling out with your sister really worth it? So ok, she may not have gone about things the right way possibly but nobody died here, my view is pick the phone up, go for a coffee and reach a reasonable resolve.

Good luck and take care now.

Pork’s

 

[WaveJumper]

I would also ask what paper work do you actually have from 5 years ago showing your share allocation, then over the last five years what involvement as a 50% share holder have you had ie have you attended any company meetings etc

On what date was the paper work filled on CH which changed your share allocation, just wondering did you ever have 50% from the get-go

 

[The Resolver]

If you did not sign a Stock Transfer Form transferring shares to your brother in law,or did not vote for a Resolution to issue 100 shares to him, then the simple fact is that you remain in law a 50% shareholder and he has no shares.

The issue is that the CH Register says otherwise,. As Companies House state when you search the Register "We do not verfy the information displayed". Its just a notice board to which Directors have a duty to correctly update them on changes in shareholdings (and other matters). The duty in law on them is to only update with truthful information.

Until this year, they ran a recitfication process that involve writing to the person who filed notice of the false information and inviting them to agree to revert to the correct position. If they do not do it then they will leave it to the complainant to issue in court for an Order that CH change the entry. What I used to do in these cases was give the person concerned the benefit of the doubt as to whether they knew they were committing an offence (i.e to explain how the shares could not change without the agreement of the complainant) so that once CH contacted them if they then doubled down with the false claim then they would indeed be committing an offence and to a much more serious degree. They could not plead ignorance.

The good news is that as of March this year new powers given to CH by Parliament (Economic Crime and Corporate Transparency Act 2023 ) to enable CH to themselves correct false information rather than leaving it to the (already over burdened) courts have come into efffect. However the new process for implementing these powers are not yet operational. I am in regular contact with CH over this delay and been promised news soon.

The answer to the main question is 'yes, you can effect change back to the true position on shares, without issuing in court'. But you can't currently do this without reaching agreement with the other party. You seem to think there is 'nothing to resolve' and that 'mediation will not work'. You are totally wrong. I am a mediator (and solicitor) but the overwhelming majority of my shareholder disputes are resolved without mediation. Its about explaining to the other party how what they seek to maintain is against their own interests since the hole of financial liablity that they are digging for themselves is only growing with time. Clearly of relevance is that, in any event, if trust has been lost (as surely it must given the facts) you need to agree a resolution of the wider issues as to future ownership and whether you or they need to exit the company. Such will nvolve many issues to resolve,

 

[Chris Ashdown]

If you did not sign a Stock Transfer Form transferring shares to your brother in law,or did not vote for a Resolution to issue 100 shares to him, then the simple fact is that you remain in law a 50% shareholder and he has no shares.

The issue is that the CH Register says otherwise,. As Companies House state when you search the Register "We do not verfy the information displayed". Its just a notice board to which Directors have a duty to correctly update them on changes in shareholdings (and other matters). The duty in law on them is to only update with truthful information.

Until this year, they ran a recitfication process that involve writing to the person who filed notice of the false information and inviting them to agree to revert to the correct position. If they do not do it then they will leave it to the complainant to issue in court for an Order that CH change the entry. What I used to do in these cases was give the person concerned the benefit of the doubt as to whether they knew they were committing an offence (i.e to explain how the shares could not change without the agreement of the complainant) so that once CH contacted them if they then doubled down with the false claim then they would indeed be committing an offence and to a much more serious degree. They could not plead ignorance.

The good news is that as of March this year new powers given to CH by Parliament (Economic Crime and Corporate Transparency Act 2023 ) to enable CH to themselves correct false information rather than leaving it to the (already over burdened) courts have come into efffect. However the new process for implementing these powers are not yet operational. I am in regular contact with CH over this delay and been promised news soon.

The answer to the main question is 'yes, you can effect change back to the true position on shares, without issuing in court'. But you can't currently do this without reaching agreement with the other party. You seem to think there is 'nothing to resolve' and that 'mediation will not work'. You are totally wrong. I am a mediator (and solicitor) but the overwhelming majority of my shareholder disputes are resolved without mediation. Its about explaining to the other party how what they seek to maintain is against their own interests since the hole of financial liablity that they are digging for themselves is only growing with time. Clearly of relevance is that, in any event, if trust has been lost (as surely it must given the facts) you need to agree a resolution of the wider issues as to future ownership and whether you or they need to exit the company. Such will nvolve many issues to resolve,

Great free suggestion and information by resolver, take heed

 

[nelioneil]

This thread is a duplication (somewhat) of this:

https://www.ukbusinessforums.co.uk/...-shares-given-away-controlling-sister.426803/

 

[WaveJumper]

This thread is a duplication (somewhat) of this:

https://www.ukbusinessforums.co.uk/...-shares-given-away-controlling-sister.426803/

Yep as @Newchodge pointed out above but seems OP has not taken anything on board ...... a case of "you can lead a horse to water but you can't make it drink"