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UKSolicitorJA
UKSolicitorJA, Solicitor
Category: Law
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Experience:  English solicitor with over 12 years experience
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How can a minority shareholder with 40% shares protect their

Resolved Question:

How can a minority shareholder with 40% shares protect their rights and voice?
What might be the key issues for a Director with the minority share of 40% when the other director has 60%?
Submitted: 3 years ago.
Category: Law
Expert:  UKSolicitorJA replied 3 years ago.
Hello,

I would advise you not to give away the 10% shareholding as you will effectively lose control of the company, unless that is what you wish to do.

However, there is a mechanism whereby as a minority shareholder, you may still protect your voice and rights by entering into a shareholders agreement with the other shareholder saying all directors and shareholder resolutions must be voted for in favour by you to be passed. This means that nothing can be done without your vote.

I would suggest that you appoint a solicitor to draft the shareholders agreement for you as you may also need to amend the Company's Articles of Association. The shareholders Agreement should prevail over the Articles. You also need to ensure that your shareholding is not diluted by the other shareholder, this will also need to be protected.

Hope this helps
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