Dividends paid to shareholders but not me!!

[spaniel12]

I own 20 % shares in our family business i left in 2012 due to ill health bought on by family issues and another staff member.

I was not paid dividends for 2011 or 2012 when their was a profit made and dividends paid to other shareholders e.g parents and sister.

I have ask on numerous occasions and have in writing that they would be paid (letter last Sept 2013) - today 1 yrs dividends were paid and they are disputing 2012 dividends due to me leaving in the March of that year (financial yr 31st Dec to 31st Dec).

Are they able to do this???

 

[businessfunding]

Dividends relate to shareholding not employment

They must be shared proportionately so if you were a shareholder you are entitled to dividends

 

[SBlundell]

They must be shared proportionately so if you were a shareholder you are entitled to dividends

Strictly - you are entitled to your share of those dividends (there is no requirement to pay dividends of course).

It's a bit further afield than simply dividends - you should also be receiving copies of the final accounts, be receiving notice of any shareholders meetings etc. As @businessfunding says, it relates to shareholding not employment - so long as you are still are a shareholder (nothing to suggest you're not) nothing has changed from that perspective. You don't have to do anything to continue your rights and entitlements - being a shareholder is simply a fact!

[Although there may be a shareholders' agreement in place which could have an impact in these sorts of circumstances?]

 

[The Resolver]

As Sam and businessfunding have said, if you own shares then any dividends declared means that the company has an indebtedness to you of 20% of the total declared. However......

1. If there are different classes of shares then it could be that the dividends were declared to a class in which your shares do not belong.

2. You may have been credited with the dividends but they may have been offset by what is claimed to be an indebtedness you have to the company.

First step is for you to download form Companies House and understand the impact of the Articles of Association and to obtain the latest Annual Return and filed accounts (formally ask for these - they can't refuse) and then serve notice on the directors to call an Extraordinary General meeting at which you can raise any subject to discuss which should include finding out about dividends.

Having made yourself a bit of a PITA to them, your next step may be to open negotiations to sell your shares - unless you feel they are likely to be a good investment ride. Remember that you are an owner of the company and, whatever shares they have, the directors work for you!

If they have no reason to not pay the dividends, then you may have a right to petition the court under s.994 of the Companies Act 2006 (that the majority have been running the company in a way prejudicial to the interests of a minority shareholder) which could result in the court ordering them to buy your shares at an independent valuation.

Call me (07885 728801) for a 'no charge' 30 mn chat if you want more details of what to do - I can represent you in the negotiations if you wish.

 

[Chris Ashdown]

Some shareholders agreements have different rules about what happens to your shares if you leave a company, it may be worth inspecting your shareholders agreement to fully understand your situation

 

[The Resolver]

Good point Chris - although he ought still to have been given notice if there was a 'bad leaver'; clause requiring a transfer back at nominal price.

Spaniel12 - if there is a Shareholders Agreement in place you would have had to sign a copy. Was there one and do you have a copy? Such a clause also could, although unusual, be contained in the Articles.

 

[spaniel12]

Thank you for your replies - they are to pay outstanding dividend