jarv

Hi All
I am looking for a bit of advice with regards to selling my shares in my business.
To cut a long story short 3 of us started a business with equal 1/3 share each.
One of the partners died leaving his stake to his wife.
The other partner wants to buy these shares from the widow thus obtaining 2/3 of the shares.
Can anyone tell me if this will enable him to make decisions with regards to the finances etc and running of the company without consulting me ?.
This could become a problem when I emigrate later this year as it devalues my equal hareholding.
If anyone can offer me advice on what would be the best way to tackle this I would be very appreciative.

Thanks

J

sonictigger

I'm not an expert by any means, but depending on your partnership agreement, it doesn't always follow that the voting rights of each partner equal the equity invested. However, if you all originally had a third each most agreements would allow for equal rights, thus the other partner buying the widow's share would mean he had the controlling percentage. I suggest you talk to a solicitor prior to any movement in equity. Do you know if the original partnership agreement made reference to possible equity movements???

spalen

It does depend on whats in your articles and memorandum of association, there should be a specific reference to voting shares or power of shares. If its silent on this then statute law will apply which would infer that owning 2/3rd of shares is more powerful than 1/3rd.

You sure do need some proper advice - this is the sort of thing worth paying for.

pike

I was involved with a three way partnership we had trade counters and showrooms when we put are partnership agreement together we had the a clause saying if one partner would die or intend to leave they could not sell to any one else other than the remaining two partners, i got pissed off with them in the end and sold out the cost of the shares were copiled by my self for what i felt i should take seems i started the business on my own ,in which i made a big mistake take advice from a charted accountant and solicitor don't make the same mistake i made

Atticus

Hi

Sounds to me like you have a limited company - if that is the case, you should have a shareholders agreement in place which would tell you what you can and cannot do with your shares - if you dont have a shareholders agreement, you can (as someone else has pointed out, fall on the memorandum and articles of association) - look at your articles of association they should have provisions re pre-emption rights - basically in what circumstances can a shareholder sell his/her shares - normally there should be a provision saying that the shareholder wishing to sell cant just sell them without offering them to the existing shareholders first - in addition should be provisions in your articles re voting rights - and what percentage of shares give you a majority etc also does the chairman have a casting vote. If you have the pre-emption rights in place, then she cannot sell her shares without you both agreeing - I would recommend you get in touch with a solicitor pronto as these things inevitably become messy if not handled carefully.

Regards

atticus

jarv

Thanks for your replies.
They have shed some light on the situation.
The other partner is not definately buying the other 1/3 shares but I needed to know my position if he did acquire them.
There is a lot more to the situation, politics, loan security etc etc which I can't explain on the forum but I have made the share position perfectly clear with my business partner and it looks as though we will split the 1/3 between us.

Cheers

Dave