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Alex J.
Alex J., Solicitor
Category: Family Law
Satisfied Customers: 3497
Experience:  Solicitors 2 years plus PQE
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I have purchased shares of a LTD (25%) after nearly 2 years

Customer Question

I have purchased shares of a LTD (25%) after nearly 2 years I would like to sell them as my circumstances have changed, but director is running low on cash to buy me out.
Whats my position? Being a bread distributor can I have ask to sell assets?
Regards
Giulio
Submitted: 5 months ago.
Category: Family Law
Expert:  Alex J. replied 5 months ago.

Hi, Thank you for your question and welcome. My name is ***** ***** I will assist you. You cannot ask for the payment to be made in assets. What you can do is arrange for him to buy the shares from you or have the company buys its own shares back, and have the price for the shares paid in installments while his cash flow improves. You could then ask for a charge over the shares or company assets (this is like a mortgage over assets) as security until you are paid the full monies for your shareholding. Are you allowed to sell to a third party?

Customer: replied 5 months ago.
Hi, thanks for your kind reply.
How I can apply for a charge over the shares? Also, yes I am allowed to sell to third party, why?
Customer: replied 5 months ago.
I have asked to have paid by installment, but i received just promised, how I can set a secure monthly payment?
Expert:  Alex J. replied 5 months ago.

Hi, Thank you. What you would need is a formal share sale agreement, which contains a payment obligation and an offer of a legal charge over the shares or the company assets. Crucially the document should say if any payment is missed the whole amount becomes due. Does the purchaser of the shares own his own home?

Customer: replied 5 months ago.
Thanks for your reply. Are you able to address to where I can find a template for this sort of agreement? Does have to be signed by a solicitor ? Purchaser had a house when we got into business togheter but now it has 'lost' it by what his saying - i don't have any other way to secure a payment ?Thanks for your replyG
Expert:  Alex J. replied 5 months ago.

Hi, Thank you. Can you tell me approximately how much he will pay for the shares and how many months installments he will pay?

Customer: replied 5 months ago.
Hi£5000 and 12/18 monthsRegards
G
Expert:  Alex J. replied 5 months ago.

Hi, Thank you. Given the sum of money involved, I would suggest you need the following:

- A letter agreement detailing the exact installments and confirmation that if any payment is missed the whole sum becomes due;

- A stock transfer form called a CON40G;

- A charge over shares

The best place to find all these documents is at a site like Simply Docs. However I must recommend you consider using a local solicitor, they should be able to arrange this for a relatively inexpensive sum. The benefit of this is if anything goes wrong you have the solicitors indemnity insurance if they mis advise you. You can find a local solicitor here www.lawsociety.org.uk.

Kind regards AJ

Customer: replied 5 months ago.
Thank you very Mich for your adviseDo you think I will be better to cancel my self as a director of the company, as they might bankrupt, or this way I might loose any advantages in getting back my monies ?Regards
Giulio
Expert:  Alex J. replied 5 months ago.

Hi, Thank you. You can resign as a director at any time. If the company is on the brink of insolvency, even if you resign now you will still have to co operate with the liquidator as you would have been a director immediately prior to insolvency. Remaining as a director means you will have greater access to the company financial information, so I would consider carefully whether it is worth resigning. If the other director is driving the company into the ground and trading knowing it has no chance of paying its creditors, then I would personally resign now.

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