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Majority shareholder rights

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Jasper12

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Jan 25, 2013
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Hi there.

A year ago I launched a new business with 2 other people (we are all directors). I am the majority shareholder with 60% of the shares and the other 2 shareholders owning 20%.

Their share allotment was subject to them fulfilling various responsibilities/duties which, for the last 6 months, has not been the case. Meanwhile I'm working almost full time in the business.

I'm now in a position where I really want to take the business to the next level yet I'm reluctant to put even more of my time into it when I have two directors/shareholders who do not share the same commitment and if I'm honest are beginning to provide very little value to the company (they have very little interest in the field that is a vital part of their role).

I'd rather not be forced into this position, but should it come to it, what rights do I have as majority shareholder to dismiss them from their directorships and regain their shares?

Since it is my hard work and expertise that has made the business possible I know I could start a new company doing the same thing but I've put so much time into making our current business what it is, I just don't want to let it go so easily.

I appreciate any help with this matter. I want to try and resolve this amicably with the other directors (we did all share the same vision once) but as bad as it sounds I feel like they are now just holding back the progress of the company.
 
We're using the default Articles of Association from Companies House. We have no other formal agreements/contracts in place.
 
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Jasper12 said:
We have no other formal agreements/contracts in place.
Click to expand...
Just goes to show once again the importance of a shareholders' agreement. :cool:

You can call a general meeting of the company with appropriate notice and remove your colleagues as directors. You cannot however force them to transfer their shares back to you :(
 
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Yeah I know, it is one of my biggest regrets. I can safely say I will never make that mistake again!

Is it possible/legal to dilute the share pool to increase my overall sharehold?
 
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Loofah said:
How was this to be implemented if there is no share agreement?
Click to expand...

I suppose it can't :( . We do we have emails stating our responsibilities as directors but no official share agreement. Unfortunately I made the mistake of trusting that they would continue to fulfil their duties (yes, I'm kicking myself now for making all these mistakes!).
 
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Kick away but consider the precise wording of those emails as they may be a ray of hope.
What you have is documented evidence and if they accepted their responsibilities and have shirked them then you have potentially the upper hand.
Have you actually mentioned your intention to either of them? If not, you need a chat.
 
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The emails quite clearly show acceptance of their responsibilities. I've not spoken to them about this yet (I've tried to arrange a meeting but they are too busy with other work). As I said in my original post I don't really want it to come to this so if it can be resolved amicably or they want to make a go of it again then I'd rather do that.
 
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Much depends upon the value of the business and their perception as to the value. If they want out, you could resort to mediation to agree a solution.
 
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I don't think they will want out as the current situation works well for them - very little commitment/work but with big rewards. However, since it is my expertise that has made (and continues to make) the business possible, my position is that if we can not come to an agreement then I will simply start a new company and do it all over again. This will reduce in an eventual zero value of the current business meaning all of our shares are worthless. This would be worse case scenario.
 
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