A-share holders rights

[Devaraj Sandberg]

What can the A-share holders of a UK company do if they're not happy with the direction a company is taking or the current directors? Any advice appreciated

 

[fisicx]

Raise the matter at the AGM and ask for a vote of no confidence in the directors.

Or get the support of the other shareholders and call for an EGM and ask for a vote of no confidence in the directors.

The shareholders own the business. They can choose direction and directors.

 

[WaveJumper]

All of the above but what level of share holding do you have ie %

 

[Mark T Jones]

What percentage?

Is there a shareholders agreement?

Is there a single controlling party?

Do you have a better plan/person in mind?

 

[Paul Kelly ICHYB]

What do the A shares allow you to do? They could be non voting.

 

[Ivanzyt]

What can the A-share holders of a UK company do if they're not happy with the direction a company is taking or the current directors? Any advice appreciated

It depends how you classify the shares. A could be a label to indicate voting shares and B could be non-voting shares.

I'll assume that A classifies voting shares.

The directors can be removed by the shareholders. There may be additional things in the articles of association or the shareholder's agreements as to how this might happen but nothing in the shareholders agreement or articles can ever remove that fundamental right.

Now this does not mean removing directors is as easy as having a vote and they are out on their arse. If they are executive directors (i.e. they work in the business) they still have all the normal employment rights. But it needs to be remembered that the role of "director" is distinct from the role the company employs you to do. The shareholders remove them as a director and the company can keep them as an employee though but that generally causes all sorts of political problems. Non-exec directors are simpler because they generally don't have an employment contract to worry about.

In essence, the shareholders can vote to remove any director by a simple majority but they can't just fire that person from the company.

If you don't have a majority of votes then there is not much you can do if you disagree with the direction of the company. You can voice your concerns. You might be able to appoint another director to the board, it is quite common for shareholders of a certain percentage to have the right to appoint a director to sit on the board to look after their interests (that person could be the shareholder themselves). This is purely a board seat and would not necessarily be paid but they would have full director rights for voting on governance matters. Your shareholder's agreement would outline these provisions.

 

[Chris Ashdown]

I think this post will answer all your questions

Shareholder's rights under the Companies Act 2006

www.business-lawfirm.co.uk

 

[Devaraj Sandberg]

Thank you for all the responses, guys. Much appreciated. It's very helpful.