Share rights

[Clains]

I own 18% of a company i work for, the majority owner wants to
increase the rent (by a lot) the company pays to them as they own the site

Also there are some unallocated shares which I think they want to buy in order to reduce my holding, is that possible or do they have to offer me the same option?

Last question can they sell the company if I do not agree with the sale ?

 

[oldeagleeye]

Unless you have something in a shareholders agreement then quite frankly your voting rights ain't worth didly squat and they can do what they like.

rob

 

[Clains]

Thanks for the reply, what about the shares, can the buy more diluting my share holding ?

 

[oldeagleeye]

yes and stop paying dividends

 

[Clains]

So they can pay them selves dividends but not me. Buy more shares diluting my holding then sell the company

What’s the point in me having 18% and doing all the work as they have no involvement?

Thanks for you responses

 

[MrMichael]

Your rights depend on the articles of association. There are generally pre-emption rights present which would mean that shares have to be offered to the existing shareholders, including you, in proportion to their existing shareholdings.

If your rights as a shareholder are being prejudiced, you do have a potential action under the Companies Act 2006, but that involves an application to court, which would/could be costly.

They can't sell the company in its totality without your consent, unless the articles/shareholders' agreement (if there is one) provide that in certain circumstances you are required to sell your shareholding if a certain proportion of shareholders are willing to sell.

As a shareholder, you are entitled to dividends in proportion to your shareholder. Presumably the articles will require dividends to be paid to each shareholder, and if this isn't taking place, it's a breach of contract, and provides further evidence that your interests as a shareholder are being prejudiced.

The articles of association may provide that various decisions require 100% shareholder approval, but in the majority of cases, directors' resolutions will be sufficient. Shareholder approval is generally only necessary for important decisions such as changing the company name or amending the articles.

Someone would need to sit down with the articles of association and discuss the full circumstances with you, to give you a better idea of the situation.

/edit The above assumes all this is taking place in relation to a company registered in England & Wales!

 

[Clains]

Thanks for you reply. Are articles of association specific to each limited company? if not where I can get a copy gov web site? Yes, It is a UK company

 

[MrMichael]

Yes, they're specific to each company. You should be able to get a copy from the Companies House website at www.companieshouse.gov.uk.

 

[oldeagleeye]

Most A of A are bog standard these days. To clarfy the dividends. You would be entitled to claim these if thay paid themselved BUT and it is a big but. they could choose to channel the profits thru the increased rent. They could increase their salaries and not pay divs or they could issue a new class of share and only pay divs on them.

Yes. You may be able in law to contest some of these actions but resorting to law costs money.

You are obviously in a non amicable situation which could turn nastier. Ask them to buy you out.

Rob

 

[oldeagleeye]

Yes, they're specific to each company. You should be able to get a copy from the Companies House website at www.companieshouse.gov.uk.

I have ordered 4 companies recently. All the A of A are bog standard.

rob