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Rakhi Vasavada
Rakhi Vasavada, Financial Advisor
Category: Finance
Satisfied Customers: 4546
Experience:  Attorney and Financial Expert. Have specialization in Financial Laws.Practice experience of over 13 years
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Hello, I need an advice on a private contract with me and

Resolved Question:

Hello,
I need an advice on a private contract with me and an advisor that will help me setup a company in UK (I'm the founder).
We are in very good relationship, and as today, we have defined a small contract, and I have some doubts about those two terms:
Board of Directors
Second Shareholder has the right to appoint one director.
Future Rights
The shares issued to the Second Shareholder will be given the same rights as the next series of Ordinary or Preference Share. If necessary the shares owned by the Second Shareholder will be substituted to ensure the same rights as the next series shares.
The question is:
would be correct to require the removal of the "right to appoint one director"?
If I understand well, as the major shareholder, I can give a director place to the Second Shareholder anyway, but without that term It wouldn't be mandatory.
Also,
About the "Future Rights" term, is it a common practice or is a special requirement?
Thanks.
Submitted: 3 years ago.
Category: Finance
Expert:  Rakhi Vasavada replied 3 years ago.
Dear Friend,

Hello and welcome. Thank you for providing an opportunity to assist you.

It is nice to hear that you all are on good terms. However, given some general principles, it is always better to document and agree on everything in writing. I might sound negative but one should never take good times for granted, though I would wish that they stay for ever.

Coming to your question in specific, in my opinion, the removal of "right to appoint one director by second shareholder" would help you keep absolute control and safe guard your interest against admitting anyone against you wish. Though it may sound unnecessary at this time but in case of any dispute or differences in future, the removal of this clause can work in your favor.

Secondly, the term "Future Rights" is generally the common practice and there is nothing that you can harm you in anyway.

I am sure this would help.

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Warm Regards
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