What is a shareholding worth and can a 50.4% shareholder/director wind up a limited company?

Discussion in 'General Business Forum' started by Andy Whitehead, Feb 13, 2019.

  1. Clinton

    Clinton UKBF Big Shot Full Member

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    Er, since when do people who post in UKBF have this strange 'shareholder agreement' thing you mention?
     
    Posted: Feb 13, 2019 By: Clinton Member since: Jan 17, 2010
    #21
  2. SteLacca

    SteLacca UKBF Ace Free Member

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    I'm sure I saw someone admit to it once.
     
    Posted: Feb 14, 2019 By: SteLacca Member since: Jun 16, 2016
    #22
  3. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

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    Yes it will cost c£3-4k for him to Liquidate it through the Court then there will be high costs and interest to be paid before any surplus (if there was anything left) could be paid to the shareholders.
     
    Posted: Feb 14, 2019 By: Lisa Thomas Member since: Apr 20, 2015
    #23
  4. Socio South West

    Socio South West UKBF Enthusiast Free Member

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    This and your statement that the company is steadily losing money suggests a company buy back of these shares is going to plunge the company into considerable peril.
    It should be easy enough to crunch a forward budget to see what the company can or can't afford.

    The voluntary liquidation option at the point of moving may be the best way forward, and shouldn't be dismissed.

    Wholeheartedly support the company investing in some input from the likes of The Resolver
     
    Posted: Feb 14, 2019 By: Socio South West Member since: Mar 24, 2013
    #24
  5. Blaby Loyal

    Blaby Loyal UKBF Ace Full Member

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    Yes, an important point not to be overlooked is what effect the transaction (if ultimately agreed in the tens of thousands, say) will have on the company's solvency.

    Would the settlement be a preference I wonder? Possibly something else to add to the OP's armoury when negotiating a settlement especially as the time period would be two years prior to liquidation.
     
    Posted: Feb 14, 2019 By: Blaby Loyal Member since: Jun 12, 2018
    #25
  6. Andy Whitehead

    Andy Whitehead UKBF Newcomer Free Member

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    I really appreciate the input everyone, thanks.


    I suppose this is the nub of it; how much can the company afford to settle for given current liabilities, future funding of new premises & cost of the move and most importantly I guess the fact that we are losing money year on year.

    Personally, liquidation would be the worst option and I really need to find a way through this whereby we stay in business. I think on balance we three remaining directors might be able to turn things around.

    I appreciate the advice re @The Resolver but you’ll understand that I’m a bit wary of recommendations for ‘a bloke off the internet’ on a forum I’ve stumbled across (albeit a very good one ). I really do think I need some help here though.
     
    Last edited: Feb 14, 2019
    Posted: Feb 14, 2019 By: Andy Whitehead Member since: Feb 13, 2019
    #26
  7. Mr D

    Mr D UKBF Legend Free Member

    15,596 1,719

    Read some of the posts by The Resolver and decide if that's the person that can help.
    His posts are usually pretty good.
     
    Posted: Feb 14, 2019 By: Mr D Member since: Feb 12, 2017
    #27
  8. Blaby Loyal

    Blaby Loyal UKBF Ace Full Member

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    That's understandable but you'd have an initial chat or exchange of PMs first and then if you decide to use him it would be done on a formal instruction basis and not done under the auspices of this Forum.

    He comes highly recommended by many on this Forum and, to be honest, that carries quite a lot of weight as, as you may have deduced, we tend to be a demanding and judgmental bunch on here.

    Well worth an initial chat at least I'd say.
     
    Posted: Feb 14, 2019 By: Blaby Loyal Member since: Jun 12, 2018
    #28
  9. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

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    If the Lqr can chalk it up to misfeasance instead of a preference there won't be a time limit.
     
    Posted: Feb 14, 2019 By: Lisa Thomas Member since: Apr 20, 2015
    #29
  10. Blaby Loyal

    Blaby Loyal UKBF Ace Full Member

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    I think you would probably have a hard time making out a legitimate case for misfeasance in this situation.
     
    Posted: Feb 14, 2019 By: Blaby Loyal Member since: Jun 12, 2018
    #30
  11. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

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    Would he not need to call a general meeting of shareholders and a vote to instigate a buy back by the company?
     
    Posted: Feb 14, 2019 By: Chris Ashdown Member since: Dec 7, 2003
    #31
  12. Blaby Loyal

    Blaby Loyal UKBF Ace Full Member

    1,016 193
    Yes, I would think that that would be part of the process as would any amendments needed to the Memorandum and Articles of Association to constitutionally permit the transaction in the first place.
     
    Posted: Feb 14, 2019 By: Blaby Loyal Member since: Jun 12, 2018
    #32
  13. The Resolver

    The Resolver UKBF Big Shot Full Member

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    Just seen this thread a bit late.

    As the company is losing money this adds strength to negotiation by the other shareholders since the longer it continues at a loss the less funds in the company and thus the lower the value in his shares. Time is against Mr 50.4%.

    The only way he could liquidate is to seek the support of Bod B . Together they just have the 75% (75.2%) needed. Since all debts can be fully paid out of the cash in the bank plus what is owed by clients , the only point of liquidation is if it can be done as a pre-pack liquidation ie one in which he appoints a liquidator on the basis he will, as best he can lawfully, agree to sell the assets to a new limited company owned by the two of them. . If the customers are carried over (difficult to fully advise without knowing the nature of the business) and therefore he can get profitable sales therefore going again he is sitting on a phoenix company with the potential to grow in value. I do not know if such growth is likely or whether the loss making is unavoidable maybe because of general market conditions. But he would have to put new monies in so probably not attractive to someone who really wants to sell out.

    Another option he has is to dismiss all directors bar himself (on his 50.4% ) and ,given the loss making trading, take a Board decision to cease trading. On that basis he at least receives 50.4% of net cash after all customers have paid and creditors paid off. However in doing such he risks in theory legal action for breach of his duties under s174 of Companies Act 2006 as a director in preventing the company from trading successfully. , Of course his defence , will be that the company was losing money so cessation was a proper and responsible decision.

    Ultimately the factor to assess before taking any step is whether the company's fortunes can easily be turned round. Time for a reality check and heads around the table.


    But as others have said the liquidation cost is a waste of funds. He probably just wants out and would not want the hassle even if suggested.Because he can't force the buy back or the purchase by other shareholders and as the trajectory is downhill, this is as clear a case as any that cries out for mediation so all can be guided into a sensible solution benefitting all.
     
    Posted: Feb 26, 2019 By: The Resolver Member since: Mar 31, 2006
    #33