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Jo C.
Jo C., Barrister
Category: Law
Satisfied Customers: 69537
Experience:  Over 5 years in practice
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Hi I currently own a private limited company to which I am

Resolved Question:

Hi I currently own a private limited company to which I am a director and sole shareholder owning 100% of the company!
I am currently in talks to join a parent company signing over all shares of my company to the parent company, the parent company will have me and someone else as 50/50 equal shareholders,
Will I still own my own company or will I only own 50% of it ?
Also can a company sectary sign any official company documents, eg bank, insurance, credit applications
And who has more say the company sectary or the director
Submitted: 2 years ago.
Category: Law
Expert:  Jo C. replied 2 years ago.
Hi.
Thank you for your question. My name is ***** ***** I will try to help with this.
In the circumstances you describe, your company will be completely owned by the parent company and you will own 50% of the parent company. I know it equates to almost the same thing in practice but the legality is different.
You need to make sure that the legal agreements here are tied up watertight because there is obviously the transfer of your shares into the parent company and the transfer of 50% of the parent company shares to you and the 2 of them need to be done at the same time and one agreement needs to be conditional upon the other.
It is not a job for the fainthearted or do it yourself
Can I clarify anything for you?
Customer: replied 2 years ago.
The parent company will be newly registered (not traded or be worth anything) If I go ahead with this deal would I still have complete control over my original company or am I signing half over to the other shareholder of the parent company?
Also do company secretary's have the power to sign official company documents eg bank, cheques, credit forms, insurance
As the parent company also wants my original company to have the same sole secretary as the parent company
Expert:  Jo C. replied 2 years ago.
It does not quite work like that.
The parent company has 100% control of your old company.
You have 50% control of the parent company.
Company secretaries can generally sign the same forms which directors sign although to be a signatory at the bank, there is no requirement to be a director or a secretary.
I can see no reason or disadvantage in having the same secretary
Customer: replied 2 years ago.
I'm probably asking the same thing again sorry but I need to be sure!
If I did go ahead, all decisions / profit to do with my original company would be a joint decision with the other shareholder/director of the parent company?
If I did go ahead and the changed my mind would I have to buy my shares back?
Also when shares are held in trust of someone else, what does this mean?
Expert:  Jo C. replied 2 years ago.
If you go ahead, all decisions in respect of your company are made by the parent company. All profits belong to the parent company.
You then have 50% of the parent company. I would suggest that you also had a shareholders agreement and director's service agreement which outlines exactly what shareholders can do and what directors can do and what they can't do. That way, you can actually dictate to a certain extent how much control you have and to stop the other people doing things without consulting you.
If you change your mind, you would have to buy your shares back from the holding company although the company is under no duty to sell them to you and it can refuse to do so. There is then an argument to be had because you have 50% control of the holding company and of the other director does not want to sell you the shares, you end up in deadlock.
I urge you to see a commercial solicitor who has experience of shareholders agreements and share purchases if you want to make sure that your position is protected.
Jo C., Barrister
Category: Law
Satisfied Customers: 69537
Experience: Over 5 years in practice
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