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Alex J.
Alex J., Solicitor
Category: Law
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Experience:  Solicitors 2 years plus PQE
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I have shares in a limited company and am also an employee.

Customer Question

I have shares in a limited company and am also an employee. I have the documents that I signed to receive the shares and want to know where I stand if I decide to leave the company as an employee.
Submitted: 2 years ago.
Category: Law
Expert:  Alex J. replied 2 years ago.
Alex J. :

Hi, Thank you for your question and welcome. My name is ***** ***** I am a company law expert.

Alex J. :

Did you receive share certificates? What documents did you sign?

Alex J. :

Kind regards AJ

JACUSTOMER-v666ihq8- :

Hi, I don't actually hold the certificates (they were never given to me and are held by our General Counsel) but I believe they have been issues. I signed the subscription letter that detailed the number and value of the shares.

Alex J. :

Hi, Thank you. Are they ordinary shares? Did you sign a shareholders agreement?

Alex J. :

Depending on what you have signed normally the employer will include a mechanism for the shares to be automatically sold back to the company using an agreed mechanism for the price. Is this a listed company?

JACUSTOMER-v666ihq8- :

The company is Indigo Michael Ltd and I'm currently unsure as to whether I signed a shareholders agreement. The shares are listed with companies house in my name and I've attached a document which was filed with companies house if this is helpful.

Alex J. :

Hi, Thank you. This is a private limited company. You need to find out if you signed anything else. Ultimately as this is a private limited company you will almost certainly have to either sell your shares back to the company or to an existing shareholder(s)

Alex J. :

If you are allowed to keep them (presumably they would only allow this if you leave on good terms) - you will still only be able to sell them when the company either floats or the existing shareholders consent to you selling.

Alex J. :

Did you ideally want to keep them?

JACUSTOMER-v666ihq8- :

Is the sale price something I can negotiate as part of my exit? If so, what rights do I have as a shareholder? Yes I wanted to keep them as I fully expect the shares to be purchased in the next 3-5 years.

JACUSTOMER-v666ihq8- :

The share structure is as shown on this page: http://companycheck.co.uk/company/07721420/INDIGO-MICHAEL-LIMITED/group-structure#shareholders

Alex J. :

Hi, Thank you. Yes if there is no mechanism that forces you to sell your shares, then you can negotiate the sale price as part of your exit.

Alex J. :

It does say their are two classes of share so check that your ownership of your shares is not conditional on your employment.

JACUSTOMER-v666ihq8- :

And how do I find out for certain if there are any mechanisms that will force me to do so? What document do I need to obtain that will detail this?

Alex J. :

You have to remember as well that this is a private limited company, therefore you are restricted on who you can sell your shares to, also the company appears to have a negative balance sheet so the underlying value cannot be enormous?

JACUSTOMER-v666ihq8- :

We've recently had a valuation of in excess of £40m for someone to purchase all of the shares - hence the reason I want to retain the shares

JACUSTOMER-v666ihq8- :

So if someone was to purchase the shares, is there a possibility that they could simply not purchase my shares? I would have thought that because they are all the same type of shares, they would not be able to sell any of the same type without selling mine

Alex J. :

Hi, Thank you. That is a possibility but it is very unlikely. No one is going to pay £40million not to buy the whole company.

Alex J. :

If you can find out whether you have a shareholders agreement - if you do, it may contain drag and tag rights that mean you effectively cannot be excluded from an arms length sale to a third party.

JACUSTOMER-v666ihq8- :

Is this document provided to companies house at any stage or is it a private document that I will have to dig out? I didn't get a copy I don't believe (if I even signed one)

Alex J. :

It is a private document.

JACUSTOMER-v666ihq8- :

So if I get hold of this document, it should detail all of this information. Is there a possibility that the document doesn't exist?

Alex J. :

Hi, Thank you. There is a possibility that there is no shareholders. If there is not, you need to download the Articles of Association from Companies House. They will tell you what the difference is between the Ordinary shares and the B Ordinary shares.

Alex J. :

This may shed some light on whether your ownership of the shares is conditional.