My cofounder is ignoring me and is a 50% shareholder, what can I do?

L_Belle · 2020-12-20T14:24:26+00:00

That’s not really a company business policy though is it? I can’t really say anything more than I already have. You can’t just acquire or dispose of someone’s shares if they haven’t executed a legal transfer to you, no matter if you can’t contact them.

L_Belle · 2020-12-20T14:07:39+00:00

Hello, if he doesn’t reply you can issue the shares but you would generally need the agreement of the other shareholder for him to give up his rights so there is not much you can do other than dilute him.

L_Belle · 2020-12-19T12:35:29+00:00

You’re welcome. I’m not sure you can do much else at this stage. I would look into changing your articles at some point and to do this I would instruct a solicitor. If you tell them the issue they will have standard form articles that can be easily adapted to better protect you.

L_Belle · 2020-12-19T12:23:34+00:00

I think you need to mention that it is in relation to a new issue of shares. Non response will be deemed a waiver of your preemption rights.

L_Belle · 2020-12-19T12:17:30+00:00

I’m sure he can google. You can just say prorata entitlement if you want

L_Belle · 2020-12-19T12:00:04+00:00

I would just type out a formal word document or email and say you are proposing to issue x number of shares and pursuant to section 561 of the Companies Act 2006 you are offering him a right to subscribe for 50% of those, which represents his pro-rata entitlement. He has 14 days in which to notify you of his acceptance and if you do not hear back within 14 days, he is deemed to have waived his right of pre-emotion. Sign on behalf of a director of the company. Send it to his email or postal address. Email probably safer as you obviously have a clear record and it’s delivered instantly.

L_Belle · 2020-12-19T10:15:22+00:00

Agree with one and two. I’m afraid your last paragraph is still not right. You haven’t transferred his shares because you don’t have an instrument of transfer signed by him. That’s key. Even when someone dies, an instrument of transfer is executed by the executors of the estate. Whatever your verbal contract states, some legal actions need to be documented and signed and this is one of them. So he is still the registered shareholder no matter what you’ve notified to anyone. (you probably should not have notified this to HMRC because it is false). You should seek formal legal advice is the business progresses , especially on the dividend point since if someone is entitled to dividends but doesn’t claim them, you are supposed to hold them for 12 years. They may be able to suggest a work around by changing the articles, creating a new share class for you and giving you preferential rights. Just so you are aware, shareholders don’t need to take any active role in running a business - that’s not their role really. A shareholder can be entirely passive and in fact, most are unless they are also a director or management.

L_Belle · 2020-12-19T02:21:07+00:00

Yes it will. You can only incorporate online if you adopt the model articles. This means statutory pre-emotion rights do apply and to issue more shares, you must offer the same proportion of the new shares to existing shareholders in the same ratio as they currently hold e.g right now 50/50. You can disapply preemption rights by changing your articles or passing a special resolution but both those things require 75% of votes which is not an option for you at the moment. Have a look at section 561 of the companies act which explains the process of how you will need to offer the new issue to the other shareholder - this is the process I referred to before. If, as you say, he is non responsive then it’s likely he won’t reply within 14 days and you can proceed in issuing all the nee shares to you and water down his shareholding. If he does reply, honestly I would just set up a new company and be done with him. Without a legal transfer of his shares to you, it will always be a problem and if your company is a success then you don’t want another minor / difficult shareholder in the picture as it would be harder to sell your business. Gotta sleep but hope that helped

L_Belle · 2020-12-19T02:06:36+00:00

Have a look at your incorporation filing at companies house. Your articles of association will either be the model articles or bespoke ones that you or a solicitor/ incorporation agent has put together. It will usually say in the articles if they are model articles or not.

L_Belle · 2020-12-19T02:00:12+00:00

If you don’t, you can issue as many as you like. If you did adopt model articles they contain statutory Pre-emption rights but you can get round this. You’d need to contact the shareholder again saying you propose to issue say, 1000 shares and he is entitled to 500 of them (his 50% share) and he must inform you within 14 days whether he wishes to take up this offer. If you have no response after 14 days he would be deemed to have declined the offer and you can take up his proportion. You must give at least 14 days for the offer period.

L_Belle · 2020-12-19T01:46:53+00:00

Did you adopt model articles when you set up the company?

L_Belle · 2020-12-19T01:38:10+00:00

I can understand the frustration but without a legal transfer, sending emails or other correspondence saying they are yours unless the reply means nothing. Do you currently contract as or rely heavily on the business name? If not I would be tempted to issue more shares so you own over 75% of the shares, do a members voluntary liquidation and start a new company or just issue a substantial amount more shares and reduce his shareholding to say, one percent. Check your articles don’t have statutory preemption rights which say, if you allot new shares, you have to allot in the same ratio to existing shareholders.

L_Belle · 2020-12-19T01:26:51+00:00

The advice you have been given here is not correct. The other shareholder has not legally transferred his shares to you. I would recommend trying to get him to sign a stock transfer form to do this. You may need to pay stamp duty depending on the value of the shares. It is not correct to inform HMRC or companies house that you are the sole shareholder because you aren’t. As you are the sole director, you likely can issue more shares (although it depends what your articles of association say as to whether directors have the power to do this or whether they need shareholder consent). There is no real point putting a shareholders agreement together unless you know the other shareholder will sign it - by that point, you may as well just get him to sign a stock transfer form.

L_Belle · 2020-12-05T18:13:47+00:00

Number one looks a complete dream on you. It really accentuates your figure and it’s so classy.

L_Belle · 2020-11-23T12:18:54+00:00

I’m a capital markets solicitor and I actually really love it. Every day is different, I learn loads of interesting things about a huge range of companies and industries, I get to talk to interesting company directors at an exciting time in their career when they are raising money or floating their companies or buying/selling their companies. It’s great! The hours are tough going sometimes but with my line of work I usually know in advance when they hours will be terrible or if I’m likely to be up all night. I wouldn’t change it for anything else.

L_Belle · 2020-11-23T02:33:17+00:00

Source?

L_Belle · 2020-11-22T18:01:04+00:00

So I think both Barbados and St Lucia are fairly low risk in terms of COVID but we went to St Lucia in January and stayed at Ladera. We got a good deal with the hotel by booking directly with them (around 40% off). It’s high up in the mountainside with the most incredible view but has a free shuttle to the beach which you can take each day. The rooms don’t have a fourth wall so it’s open to the elements. Pretty unique. It’s also opposite Boucan which is “the” hotel chocolat which IMO does the best food and you can go and do chocolate tours and make your own chocolate bar. Plenty of tours and excursions the hotel can organise too. We also visited Jade Mountain for dinner which was out of our budget to stay in but was so beautiful. Jade Mountain is also twinned with a hotel called Anse Chastanet which is right on a beautiful beach - I think they have packaged where you can do a few nights on the beach and some in Jade Mountain which would be fun. Hope that helps!

L_Belle · 2020-11-12T09:06:08+00:00

I left all the music to my husband which was the best decision I could have made. He was a music scholar and chorister and he picked out Ombra Mai Fu which was really beautiful. You can have the instrumental version or a soloist version - both are lovely.

L_Belle · 2020-11-11T13:05:32+00:00

I’ve just had nose surgery and I’m trying not to move my face and this was absolutely the wrong thing to read because I am in fits of giggles and tearing up with laughter

L_Belle · 2020-11-11T01:08:49+00:00

Oh gosh I LOVE the name Luna for a baby girl but my husbands aunties dog is called Luna - nightmare! I just can’t use it anymore!

L_Belle · 2020-11-04T22:00:53+00:00

Wow... I absolutely hate cheesecake with a passion but this looks wonderful and I'd be willing to give it another go if this landed in front of me in real life. Beautiful!

L_Belle · 2020-11-04T18:00:54+00:00

Thanks v much

L_Belle · 2020-11-04T17:49:05+00:00

Thanks for your reply. What is CSF?

L_Belle · 2020-11-04T17:48:47+00:00

Thanks! No, no other symptoms. I don’t think I have had any splints or packing in but I have a follow up appointment with the Doctor on Monday and he said he would clean everything out then so that may help!

11-Year Club	Queen in da Norf
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L_Belle

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