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Ask Ash Your Own Question

Ash, Solicitor
Category: Law
Satisfied Customers: 10914
Experience:  Solicitor with 5+ years experience
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I am in what I believe to be an impossible situation. In

Customer Question

I am in what I believe to be an impossible situation.
In 2008 I was semi retired and the inventor of an un-patentable formula for manufacture of a traditional but unstable chemical used in the healthcare industry. My invention makes it stable. The potential is immense and globally very significant. (I have a track record in a parallel company which I jointly started and staid with through IPO on the LSE in 2006 after which I retired).
I needed to raise VC to develop the manufacture and marketing.
A friend of a friend (A) who seemed to have a good track record found a fund source (B) and we formed a limited company split 3 ways - Shares 30% each to A, B and me. 10% to others. A had agreed that Bs funding would be a loan but B wanted no executive role.
A made me Chairman, himself CEO. He appointed his wife as CFO. This was in 2009.
Everything went reasonably well to begin with. The product was validated by top clinical institutions to prove it did what it said on the label.
We have valuable licences in place with impressive national and international companies who market the product under their own branding.
In 2011 I and a co director(C) began to suspect that A was distorting facts and not revealing the truth to either the other shareholders nor people he was negotiating with in selling them licences.
We also discovered A was changing board meeting minutes to suit himself and his wife. Board decisions were ignored and payments were made without board consent.
Another board director (D) - (a lawyer and investment guardian for B) suspected A of an offence against the bribery act involving a Saudi company and commissioned an opinion from an independent lawyer. On the evidence provided, this report confirmed that A had breached the Bribery Act. No action was taken at this time as it was feared it would bring the company down. B would lose his investment.
At this time also I and C realised that the company was in financial trouble and we knew that A was touting the technology around the city trying to raise investment.
I offered not to take my salary and let it accrue until such time as the company could afford it. (Our salaries - set originally by A - were ridiculously high for a fledgeling company which I thought and said at the time was not right).
In 2013 A accepted £250,000 from a licensee (E) as payment for product which legally A couldn't supply as it would breach another licensee's agreement.
A has spent E's money and E wants it back so he is suing the company. A disputes the debt.
The company also owes £100,000 VAT which A disputes.
I and B could have voted A off the board and put in entirely new management and have the company run properly. However D advised B that if that was done the company would fold as it is in so much debt and B would lose his investment. D and B have been convinced by A that A is about to sell a majority shareholding to high net worth investors and B will get all his money and more. I and C know this to be untrue.
I and C, since about March 2014 couldn't get any information about the true state of the company and so we were unable to fulfil our legal responsibilities to other shareholders. We also felt we would be jointly personally liable as directors for the debts and criminal actions of A and the company generally so we resigned our directorships in November 2014. We notified all shareholders of our position and discontent.
I notified the police of the offence concerning the bribery act and have informed the Intelligence service of the Insolvency dept of HM Gov. I believe both bodies are looking in to it.
C is owed about £70,000 in back salary and expenses unpaid. I am owed £240,000 in accrued consultancy. A disputes both. There are other creditors.
A is claiming to own all the IP (although there is no patent). He claims it is his and that mine was worthless as he claims he has modified it. There are key witnesses against that. There are none who could back A.
I feel that our only way left to save the company is to try to bring about a foreclosure and negotiate with the administrator.
Personally I have no money for a fight in the courts. How can I bring about any legal closure?
Submitted: 1 year ago.
Category: Law
Expert:  Ash replied 1 year ago.
Alex Watts : Hello my name is ***** ***** I will help you with this.
Alex Watts : Is there any form of shareholder or directors agreement?
JACUSTOMER-9e8x0pce- :

Yes, there is a shareholder agreement.

Alex Watts : What does it say about disputes or closing the business ?
JACUSTOMER-9e8x0pce- :

I am afraid I really do not know. I believe I wouldn't be able to get our shareholder agreement from A but there are others who may have it. I may have copy on an old computer but it may not be the latest one.

Alex Watts : Ok. You want to close the company. Do other shareholders agree? How much are you owed?
JACUSTOMER-9e8x0pce- :

I am rather naive and have never used this system. I will be going out in about 15 minutes.

JACUSTOMER-9e8x0pce- :

C will agree but he is a minor shareholder. Other minor shareholders will agree. B will always vote on D's advice.

JACUSTOMER-9e8x0pce- :

yes, I have found the agreement dated feb 2014.

Alex Watts : Can you get more than 51% voting to close?
JACUSTOMER-9e8x0pce- :

no, as I think I explained there is a 30-30-30 deadlock.

JACUSTOMER-9e8x0pce- :

There seems to be a clause that requires a 75% vote to change anything to do with the constitution of the company. I am sure 51% could vote the guy off but I cannot manage that.

JACUSTOMER-9e8x0pce- :

I feel that, by the nature of your questions, you need to read my initial description more thoroughly. Please ask me about anything unclear.

Alex Watts :

Yes I read there was a 30-30-30

Alex Watts :

How much is your Directors loan account?

JACUSTOMER-9e8x0pce- :

Do you mean the venture capitalist whom I have called B who put in the initial sum? If so, that was €900,000 approximately.

JACUSTOMER-9e8x0pce- :

There is another loan in the business of around £50,000. That person has no shares and is unsecured.

JACUSTOMER-9e8x0pce- :

I am off to bed now and can resume this tomorrow. If you need any excerpts from the S'holder agreement I can cut and paste or send the whole thing.

Alex Watts :

I will need to see what it says about disputes or termination of business

JACUSTOMER-9e8x0pce- :

THIS AGREEMENT is dated 3 February 2014


(1) The parties whose names and addresses are listed in columns 1 and 2 of Schedule 1 (the 'Shareholders').

(2) Biomimetics Health Industries Holdings UK Limited a private company incorporated and registered in England and Wales with company number 08085906 whose registered office is at Accurist House***** London, W1U 7AL (the 'Company'')


(A) The Company has an issued share capital of £10,256, divided into 10,256 ordinary shares of £1 each, all of which are issued and fully paid.

(B) Each Shareholder is the registered owner of the ordinary shares of £1 each in the capital of the Company as listed in column 3 of Schedule 1:

(C) The Shareholders have agreed to enter into this agreement for the purpose of controlling their capacity as shareholders of the Company.


1. Interpretation

1.1. The following definitions shall apply in this agreement.

Acting in Concert has the meaning given to it in the City Code

on Takeovers and Mergers published by the Panel

on takeovers and Mergers (as amended from time

to time).


Business Day

the board of directors of the Company as constituted from time to time.

a day (other than a Saturday, Sunday or public holiday in the United Kingdom) when banks in the City of London are generally open for business.

Continuing Shareholders

Controlling Interest

has the meaning given in clause 4.4 and Continuing Shareholder means any of them.

means an interest in shares giving the holder or holders control of the Company within the meaning of section 1124 of the corporation Tax Act 2010.

Biomimetics Health Industries Group

in relation to the Company, the Company and any subsidiary or holding company as defined in Section 1159 of the Companies Act 2006.

Business Plan

Financial Year

Permitted Transferee

has the meaning given in clause 2.3.

in relation to the Company, means a financial accounting period of 12 months.

the spouse or siblings of a Shareholder or any of his/her children (whether natural or adopted) or where the Shareholder is a Company, any member of its Group.

Price Notice

has the meaning given in clause 4.4.

Sale Price

the Proposed Sale Price or, following service of a Price Notice, the price per Sale Share determined in accordance with clause 4.5.


each of the parties from time to time to this agreement (including any person who becomes a party by executing a deed of adherence pursuant to clause 4.9.2), together with their respective successors and assigns and Shareholders means all of them together.


the auditors for the time being of the Company or, if they decline the instruction, an independent firm of accountants appointed by the Seller and by the Continuing Shareholders or, in the absence of agreement between them on the identity of the expert within five Business Days of the expiry of the ten Business Day period following service of a Price Notice, an independent firm of accountants appointed by the President, for the time being, of the Institute of Chartered Accountants of England and Wales (in each case acting as an expert and not as an arbitrator).

1.2. Clause headings do not affect the interpretation of this agreement.

1.3. A reference to a person includes a natural person, a corporate or unincorporated body (whether or not having a separate legal personality).

1.4. A reference to a particular law is a reference to it as it is in force for the time being taking account of any amendment, extension, application or re-enactment, and includes any subordinate legislation for the time being in force made under it.

1.5. A reference to Writing or written includes faxes but not e-mail.

1.6. Words in the singular include the plural and in the plural include the singular.

2. Business of the Company

2.1. The business of the Company is to act as a holding company for Biomimetics Health Industries Group, subject to variation from time to time in accordance with clause 3.1.1 (Business).

2.2. Each Shareholder shall use his reasonable endeavours to promote (so far as is lawfully possible in the exercise of his rights and powers as a shareholder of the Company) the success of anddevelop the Business, in each case for the benefit of its shareholders as a whole.

2.3. The Business Plan is an annual business plan for the Company prepared by the Company and it shall include in relation to the Financial Year to which it relates:

2.3.1. a cashflow statement giving: an estimate of the working capital requirements; and an indication of the amount (if any) that it is considered prudent to retain, for the purpose of meeting those requirements, out of those profits of the previous Financial Year that are available for distribution to Shareholders;

2.3.2. a monthly projected profit and loss account;

2.3.3. an operating budget (including capital expenditure requirements) and balance sheet forecast;

2.3.4. a management report giving business objectives for the Financial Year; and

2.3.5. a financial report which shall include an analysis of the estimated results of the Company for the previous Financial Year compared with the Business Plan for that year, identifying variations in sales revenues, costs and other material items.

2.4. The Business Plan for every Financial Year shall be:

2.4.1. prepared by the Board within 45 days of the end of the preceding Financial Year (the first day being the first day of the Financial Year to which the plan relates); and

2.4.2. adopted and approved by the parties at the annual general meeting of Shareholders as soon as possible after it has been prepared.

2.5 Julian Schild shall be entitled to attend all meetings of the Board as observer.

3. Matters requiring consent of 75% of the Shareholders

The Company shall not, without the prior written consent of 75% of all Shareholders:

3.1.1. cease to be a private company or change (by whatever means) the nature of the Business, as varied from time to time in accordance with this clause 3.1.1; or

3.1.2. amend its articles of association; or

3.1.3. change the name of the Company; or

3.1.4. sell or otherwise dispose of the whole or any part of its undertaking, property, assets, or any interest in them or contract to do so whether or not for valuable consideration; or

3.1.5. increase, reduce, sub-divide, consolidate, redenominate, cancel, purchase or redeem any of the capital of, or allot or issue any shares or other securities in the capital of, the Company; or

3.1.6. alter any rights attaching to any class of share in the capital of the Company, or create any option, warrant or any other right to acquire or subscribe for any shares or other securities in the capital of the Company; or

3.1.7. do, permit or allow to be done any act or thing whereby the Company may be wound-up, or enter into any compromise or arrangement under the Insolvency Act 1986; or

3.1.8. merge or amalgamate with any other company or undertaking, or acquire directly or indirectly any interest in any shares or other security convertible into shares of any other company, or form or acquire any subsidiary; or

3.1.9. give any guarantee, make any payment or incur any obligation or act as surety otherwise than in connection with the Company’s ordinary business for the time being; or

3.1.10. lend or agree to lend, grant any credit or make any advance to any person otherwise than in the ordinary course of the Business of the Company; or

3.1.11. appoint or remove any director; or

3.1.12. hold any meeting of the shareholders or purport to transact any business at such meeting, unless each Shareholder has been given notice of the meeting in accordance with the articles of the Company.

4. Transfer of shares

4.1. No Shareholder shall sell, transfer, assign, pledge, charge or otherwise dispose of any share or any interest in any share in the capital of the Company, except as permitted by this agreement

4.2. A Shareholder may at any time transfer its shares in the Company to a Permitted Transferee without being required to comply with the pre-emption procedure set out in this clause 4.

4.3. A Shareholder (Seller) wishing to transfer shares in the capital of the Company (Sale Shares) shall give notice in writing (Transfer Notice) to the other parties (Continuing Shareholders) specifying the details of the proposed transfer, including the number of Sale Shares comprised within the Transfer Notice, the identity of the proposed buyer(s), the proposed price for each Sale Share (Proposed Sale Price) and each Continuing Shareholder's proportionate entitlement to the Sale Shares, being the same proportion of the Sale Shares as the proportion that the number of ordinary shares held by him bears to the total number of ordinary shares held by the Continuing Shareholders (in respect of each Continuing Shareholder, his Entitlement).

4.4. The Continuing Shareholders (or any of them) may, by giving notice in writing (Price Notice) to the Seller at any time within ten Business Days of receipt of a Transfer Notice, notify the Seller that the Proposed Sale Price is too high. Following service of a Price Notice, the parties shall endeavour to agree a price for each of the Sale Shares. If the parties have not agreed such a price within ten Business Days of the Seller's receipt of a Price Notice, they (or any of them) shall immediately instruct the Valuers to determine the Fair Value of each Sale Share in accordance with clause 6.

4.5. If, following delivery to him of the Valuers' written notice in accordance with clause 6 the Seller does not agree with Valuers' assessment of the Fair Value of the Sale Shares, he shall be entitled to revoke the Transfer Notice by giving notice in writing to the Continuing Shareholders within five Business Days of delivery to him of the Valuers' written notice. If the Seller revokes the Transfer Notice, he is not entitled to transfer the Sale Shares except in accordance with this agreement.

4.6. Within 20 Business Days of receipt (or deemed receipt) of a Transfer Notice or, if later, within 20 Business Days of receipt of the Valuers' determination of the Fair Value (and provided the Seller has not withdrawn the Transfer Notice), a Continuing Shareholder shall be entitled (but not obliged) to give notice in writing (Acceptance) to the Seller stating that he wishes to purchase his Entitlement up to a maximum of his Entitlement to the Sale Shares at the Sale Price. A Continuing Shareholder may, in his Acceptance, indicate that he would be willing to purchase a particular number of Sale Shares in excess of his Entitlement (Extra Shares). No Continuing Shareholder shall be entitled to purchase less than his Entitlement to Sale Shares.

4.7. If, on the expiry of the relevant 20 Business Day period referred to in clause 4.6, the total number of Sale Shares applied for is greater than the available number of Sale Shares, each accepting Continuing Shareholder shall be allocated his Entitlement (or such lesser number of Sale Shares for which he has applied) and applications for Extra Shares shall be allocated in accordance with such applications or, in the event of competition, among those Continuing Shareholders applying for Extra Shares in such proportions as equal (as nearly as may be) the proportions of all the shares of the same class held by such Continuing Shareholders.

4.8. Completion of those Sale Shares accepted by Continuing Shareholders shall take place in accordance with clause 5.

4.9. In relation to any Sale Shares not accepted by Continuing Shareholders:

4.9.1. the Seller shall be entitled to transfer those Sale Shares to the third party buyer identified in the Transfer Notice at a price per Sale Share not less than the Sale Price; and

4.9.2. the Seller shall procure that any buyer of Sale Shares that is not, immediately prior to completion of the transfer in question, a party to this agreement shall, at completion, enter into a deed of adherence with the Continuing Shareholders, agreeing to be bound by the terms of this agreement, in such form as the Continuing Shareholders may reasonably require (but not so as to oblige the buyer to have any obligations or liabilities greater than those of the Seller).

4.10. If the holders of 75% of the Shares in issue for the time being (Selling Shareholders) wish to transfer all (but not some only) of their Shares (Sellers' Shares) to a bona fide purchaser on arm's length terms (Proposed Buyer), the Selling Shareholders may require all other Shareholders (Called Shareholders) to sell and transfer all their shares (Called Shares) to the Proposed Buyer (or as the Proposed Buyer directs) (Drag Along Option).

4.11. The Selling Shareholders may exercise the Drag Along Option by giving written notice to that effect to the Called Shareholders (Drag Along Notice) at any time before the transfer of the Sellers' Shares to the Proposed Buyer. The Drag Along Notice shall specify:

4.11.1. that the Called Shareholders are required to transfer all their Called Shares;

4.11.2. the person to whom the Called Shares are to be transferred;

4.11.3. the purchase price payable for the Called Shares which shall, for each Called Share, be an amount at least equal to the price per share offered by the Proposed Buyer for the Sellers' Shares; and

4.11.4. the proposed date of the transfer.

4.12. Once issued, a Drag Along Notice shall be irrevocable. However, a Drag Along Notice shall lapse if, for any reason, the Selling Shareholders have not sold the Sellers' Shares to the Proposed Buyer within thirty Business Days of serving the Drag Along Notice. The Selling Shareholders may serve further Drag Along Notices following the lapse of any particular Drag Along Notice.

4.13. Completion of the sale of the Called Shares shall take place on the Completion Date. Completion Date means the date proposed for completion of the sale of the Sellers' Shares unless:

4.13.1. all of the Called Shareholders and the Selling Shareholders agree otherwise in which case the Completion Date shall be the date agreed in writing by all of the Called Shareholders and the Selling Shareholders; or

4.13.2. that date is less than seven Business Days after the date on which the Drag Along Notice is served, in which case the Completion Date shall be the second Business Day after service of the Drag Along Notice.

4.14. The sale of the Called Shares by the Called Shareholders shall not be subject to those provisions.

4.15. On or before the Completion Date, the Called Shareholders shall execute and deliver stock transfer forms for the Called Shares, together with the relevant share certificates (or a suitable indemnity for any lost share certificates) to the Company. On the Completion Date, the Company shall pay the Called Shareholders, on behalf of the Proposed Buyer, the amounts due to the extent that the Proposed Buyer has put the Company in the requisite funds. The Company's receipt for the price shall be a good discharge to the Proposed Buyer. The Company shall hold the amounts due to the Called Shareholders in trust for the Called Shareholders without any obligation to pay interest.

4.16. To the extent that the Proposed Buyer has not, on the Completion Date, put the Company in funds to pay the purchase price due in respect of the Called Shares, the Called Shareholders shall be entitled to the return of the stock transfer forms and share certificates (or suitable indemnity) for the relevant Called Shares and the Called Shareholders shall have no further rights or obligations in respect of their Shares.

4.17. If any Called Shareholder does not, on or before the Completion Date, execute and deliver transfer(s) in respect of all of the Called Shares held by it, each defaulting Called Shareholder shall be deemed to have irrevocably appointed any person nominated for the purpose by the Selling Shareholders to be its agent to execute all necessary transfer(s) on its behalf, against receipt by the Company (on trust for such holder) of the purchase price payable for the Called Shares, and to deliver such transfer(s) to the Proposed Buyer (or as it may direct) as the holder thereof. After the Proposed Buyer (or its nominee) has been registered as the holder of the Called Shares, the validity of such proceedings shall not be questioned by any such person. Failure to produce a share certificate shall not impede the registration of shares.

4.18 If, as a consequence of one or a series of related transactions, one or more Sellers propose to transfer any of the Shares (Proposed Transfer) which would, if carried out, result in any person (Buyer), and any person Acting in Concert with the Buyer, acquiring a Controlling Interest in the Company. Before making a Proposed Transfer, a Seller shall procure that the Buyer makes an offer (Offer) to the other Shareholders to purchase all of the Shares held by them for a consideration in cash per Share that is at least equal to the highest price per Share offered or paid by the Buyer, or any person Acting in Concert with the Buyer, in the Proposed Transfer or in any related previous transaction in the six months preceding the date of the Proposed Transfer (Specified Price).

4.19 The Offer shall be made by written notice (Offer Notice), at least fourteen Business Days before the proposed sale date (Sale Date). To the extent not described in any accompanying documents, the Offer Notice shall set out:

(a) the identity of the Buyer;

(b) the Specified Price and other terms and conditions of payment;

(c) the Sale Date; and

(d) the number of Shares proposed to be purchased by the Buyer (Offer Shares).

4.20 If the Buyer fails to make the Offer to all of the holders of Shares in the Company, the Seller shall not be entitled to complete the Proposed Transfer and the Company shall not register any transfer of Shares effected in accordance with the Proposed Transfer.

4.21 If the Offer is accepted by any Shareholder (Accepting Shareholder) in writing within seven Business Days of receipt of the Offer Notice, the completion of the Proposed Transfer shall be conditional on completion of the purchase of all the Offer Shares held by Accepting Shareholders.

4.22 The purchase of Offer Shares from Accepting Shareholders shall not be subject to the pre-emption provisions in this clause 4.

5. Completion of share purchase

5.1 Completion of the sale and purchase of shares shall take place five Business Days after:

5.1.1 the date of delivery of the Transfer Notice to the Continuing Shareholders, unless the Continuing Shareholders (or any of them) have served a Price Notice; or

5.1.2the date of delivery of determination of the Sale Price.

5.2 At such completion:

5.2.1 the Seller shall deliver, or procure that there is delivered to each Continuing Shareholder who is to purchase Sale Shares, a duly completed stock transfer form transferring the legal and beneficial ownership of the relevant Sale Shares to him, together with the relevant share certificate(s) (or an indemnity in lieu thereof) and such other documents as the Continuing Shareholders or the Company may reasonably require to show good title to the shares, or to enable him to be registered as the holder of the shares;

5.2.2 each relevant Continuing Shareholder shall deliver or procure that there is delivered to the Seller a bankers' draft made payable to the Seller or to his order for the Sale Price for the Sale Shares being transferred to him (or such other method of payment agreed between a Continuing Shareholder and the Seller); and

5.2.3 if, following a sale of shares in accordance with this agreement, the Seller holds no further shares in the Company: the Seller shall deliver, or procure that there are delivered to the Company, his resignation as a director of the Company and resignations from any directors appointed by him, such resignations to take effect at completion of the sale of the Sale Shares; and the Seller shall automatically cease to be a party to this agreement, but without prejudice to any rights or obligations of the Seller which accrued before such cessation (including, without limitation, his obligations under clause 10 which shall survive such cessation), including in respect of any prior breach of this agreement.

5.2.4 Any transfer of shares by way of a sale that is required to be made under this agreement shall be deemed to include a warranty that the Seller sells the shares with full title guarantee.

5.2.5 If any Continuing Shareholder fails to pay the Sale Price payable by him on the due date, without prejudice to any other remedy which the Seller may have, the outstanding balance of that Sale Price shall accrue interest at a rate equal to 5% per annum above the base rate of HSBC Bank Plc from time to time.

5.2.6 Each of the Continuing Shareholders shall use his reasonable endeavours to procure (so far as is lawfully possible in the exercise of his rights and powers as a shareholder of the Company) the registration (subject to due stamping by the Continuing Shareholders) of the transfers of the Sale Shares and each of them consents to such transfers and registrations.

6. Fair value

The Fair Value for any Sale Share shall be the price per share determined in writing by the Valuers on the following bases and assumptions:

a) valuing each of the Sale Shares as a proportion of the total value of all the issued shares in the capital of the Company without any premium or discount being attributable to the percentage of the issued share capital of the Company which they represent;

b) if the Company is then carrying on business as a going concern, on the assumption that it will continue to do so;

c) the sale is to be on arms' length terms between a willing seller and a willing buyer;

d) the shares are sold free of all restrictions, liens, charges and other encumbrances; and

e) the sale is taking place on the date the Valuers were requested to determine the Fair Value.

7. Issue of further shares

7.1 If the Company wishes to issue further shares, each of the Shareholders shall use his reasonable endeavours to procure (so far as is lawfully possible in the exercise of his rights and powers as a shareholder of the Company) that the Company offers, by giving written notice to each respective Shareholder, that proportion of the shares proposed to be issued which the number of ordinary shares held by that Shareholder bears to the total number of ordinary shares in issue at the time the Company gives its notice. Such offer shall state the number of shares to be issued and the price of the shares.

7.2 Each Shareholder may accept the offer by giving notice to the Company, at any time within seven Business Days following the Company’s notice, accompanied by a banker's draft made payable to the Company in respect of full payment for the shares to be subscribed for.

7.3 Any shares referred to in the Company’s offer, for which the Shareholders do not subscribe, may be issued by the Company as it thinks fit, provided that any such issue is completed within twenty one Business Days after the Company’s notice of the offer.

8. Termination

8.1 This agreement terminates immediately upon the occurrence of any of the following events:

8.1.1 the passing of a resolution for the winding up of the Company; or

8.1.2 the appointment of a receiver, administrator or administrative receiver over the whole or any part of the assets of the Company or the making of any arrangement with the creditors of the Company for the affairs, business and property of the Company to be managed by a supervisor.

8.2 Termination of this agreement shall be without prejudice to the rights or obligations of any Shareholder accrued prior to such termination, or under any provision which is expressly stated not to be affected by such termination including in respect of any prior breach of this agreement.

8.3 Following the passing of a resolution for the winding-up of the Company, the Shareholders shall endeavour to agree a suitable basis for dealing with the interests and assets of the Company and shall endeavour to ensure that:

(a) all existing contracts of the Company are performed so far as resources permit;

(b) no new contractual obligations are entered into by the Company; and

(c) the Company is wound up as soon as practicable.

8.4 The following provisions of this agreement remain in full force after termination:

(a) this clause 8;

(b) Clause 10 (No partnership);

(c) Clause 11 (Confidentiality);

(d) Clause 12 (Notices);

(e) Clause 16 (Costs and expenses);

(f) Clause 17 (Entire agreement); and

(g) Clause 20 (Governing law and jurisdiction).

9. Status of this agreement and the parties’ obligations

9.1 Each Shareholder shall exercise all voting rights and other powers of control lawfully available to him as a shareholder of the Company so as to procure that, at all times during the term of this agreement, the provisions of this agreement are duly and promptly observed and given full force and effect according to its spirit and intention.

9.2 If any provisions of the memorandum or articles of association of the Company at any time conflict with any provisions of this agreement, this agreement shall prevail as between the parties to it and each of the Shareholders shall, whenever necessary, exercise all voting and other rights and powers lawfully available to him as a shareholder of the Company so as to procure the amendment, waiver or suspension of the relevant provision of the memorandum or articles of association to the extent necessary to permit the Company and its affairs to be administered as provided in this agreement.

10. No partnership

The Shareholders are not in partnership with each other, nor are they agents of each other.

11. Confidentiality

Each Shareholder undertakes that he shall not at any time after the date of this agreement (or, if later, the date he became a party to it) use, divulge or communicate to any person (except to his professional representatives or advisers or as may be required by law or any legal or regulatory authority) any confidential information concerning the terms of this agreement, the business or affairs of the other Shareholders or the Company which may have (or may in future) come to his knowledge, and each of the Shareholders shall use his reasonable endeavours to prevent the publication or disclosure of any confidential information concerning such matters.

12. Notices

12.1 Any notice given under this agreement shall be in writing and shall be delivered by hand, transmitted by fax, or sent by pre-paid first class post or recorded delivery post to such address of the party notified to the other parties. A notice delivered by hand is deemed to have been received when delivered (or if delivery is not in business hours, 9.00 am on the first Business Day following delivery). A correctly addressed notice sent by pre-paid first class post or recorded delivery post shall be deemed to have been received at the time at which it would have been delivered in the normal course of post. A notice sent by fax to the fax number of the relevant party shall be deemed to have been received at the time of transmission.

12.2 The addresses for service of notices are set out in column 2 of Schedule 1.

13. Severance

13.1 If any provision (or part of a provision) of this agreement is found by any court or administrative body of competent jurisdiction to be invalid, unenforceable or illegal, the other provisions shall remain in force.

13.2 If any invalid, unenforceable or illegal provision would be valid, enforceable and legal if some part of it were deleted, the provision shall apply with whatever modification is necessary to give effect to the commercial intention of the parties.

14. Variation and waiver

14.1 Any variation of this agreement shall be in writing and signed by or on behalf of all the parties for the time being.

14.2 No failure or delay by a party to exercise any right or remedy provided under this agreement or by law shall constitute a waiver of that or any other right or remedy, nor shall it preclude or restrict the further exercise of that or any other right or remedy. No single or partial exercise of such right or remedy shall preclude or restrict the further exercise of that or any other right or remedy.

14.3 Unless specifically provided otherwise, rights and remedies arising under this agreement are cumulative and do not exclude rights and remedies provided by law.

15. Assignment

15.1 No person may assign, or grant any encumbrance over, or deal in any way with, any of his rights under this agreement or any document referred to in it, or purport to do any of the same, without, in each case, the prior written consent of all the parties for the time being [(such consent not to be unreasonably conditioned, withheld or delayed).

15.2 Each person that has rights under this agreement is acting on his own behalf.

16. Costs and expenses

Each Shareholder shall pay the costs relating to the negotiation, preparation, execution and implementation by him of this agreement in the same proportion which his shares in the Company bears to the total number of shares in the Company held by all Shareholders.

17. Entire agreement

17.1 This agreement constitutes the whole agreement between the parties and supersedes any previous arrangement, understanding or agreement between them relating to the subject matter they cover.

17.2 Each party acknowledges that, in entering into this agreement, he does not rely on, and shall have no remedy in respect of, any statement, representation, assurance or warranty of any person other than as expressly set out in this agreement or those documents.

17.3 Nothing in this clause 18 operates to limit or exclude any liability for fraud.

18. Third party rights

A person who is not a party to this agreement shall not have any rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this agreement.

19. Counterparts

This agreement may be executed in any number of counterparts, each of which when executed and delivered shall constitute an original of that agreement, but all the counterparts shall together constitute the same agreement. No counterpart shall be effective until each party has executed at least one counterpart.

20. Governing law and jurisdiction

20.1 This agreement and any disputes or claims arising out of or in connection with its subject matter or formation (including non-contractual disputes or claims) are governed by and construed in accordance with the laws of England.

20.2 The parties irrevocably agree that the courts of England have exclusive jurisdiction to settle any dispute or claim that arises out of or in connection with this agreement or its subject matter or formation (including non-contractual disputes or claims).

This agreement has been entered into on the date stated at the beginning of it.

Alex Watts :

Is the VC trying to get the money back?

JACUSTOMER-9e8x0pce- :

Well, not actively but he doesn't want to lose his investment. He feels that if he votes with me, the company will fail. He sees the wild promises by A of imminent investment as being a quicker way of realising that goal. He lives in Malta mostly and is somewhat naive - although English. He is aware of all the criminal and anti company behaviour of A but chooses to ignore it all.

JACUSTOMER-9e8x0pce- :

A is the most disliked person I have ever met. The licensees have all been deceived by him and led into contract by convincing but false promises (as indeed I have been) but I am the one stirring it up and I am determined the man will meet justice even if it does mean the company collapses.

JACUSTOMER-9e8x0pce- :

The reason we know that there is no imminent large incoming investment is that A has been promising this for 3 years! During this time there has been absolutely no DD whatever done by anyone on the company nor any of its licensees nor our licensed sub contract manufacturers. If you were investing a few million into a company I am sure you'd want to reassure yourself of the bona fides of that company.

Alex Watts : Yes, so what is it you want to achieve ?
JACUSTOMER-9e8x0pce- :

What are my options? I think in an ideal world, I'd like somehow to have the company wound up and do a deal with the administrator. E and I are prepared to virtually write off our debts and E (who is the owner of a large multi national) is prepared to step in and run my company while putting in an entire change of experienced and honest management.

Alex Watts : I am just struggling to see a basis to wind it up. You are not owed anything? Would any creditor be willing to do this..
JACUSTOMER-9e8x0pce- :

i'll continue tomorrow. Thank you.

Alex Watts :


JACUSTOMER-9e8x0pce- :

I am owed £240,000 in accrued salary/consultancy as, to save the company in May 2011, I suggested doing this. A carried on paying himself £10,000 cpm and his wife £4,000. I cannot prove this except that before that my salary came in at £7,000- bank statements prove it. The board meeting minutes have been altered so as not to show my offer. C is my witness.

JACUSTOMER-9e8x0pce- :

A will dispute this and will probably lie that I had been dismissed…or some such rubbish. The company which is owed £250,000 is in the process of suing but A has pleaded more time as all debts will "shortly be settled".

JACUSTOMER-9e8x0pce- :

C wants to sue for his back salary and expenses totalling around £70,000 but dare not because he has had a nervous breakdown due to everything that has gone on and his doctor has advised him to go nowhere near work for the time being.

JACUSTOMER-9e8x0pce- :

E has offered to underwrite C's £70,000 if we bring the company down. However A will challenge the £250,000 of E as he says that E can still have the product he paid for "but it is delayed". This promise has been made by A for over a year.

JACUSTOMER-9e8x0pce- :

What did you determine from the shareholder agreement?

JACUSTOMER-9e8x0pce- :

I am going to the dentist and will be back this afternoon.

Alex Watts :

The only way is to close the business. You can't do this by resolution because of the 75% requirement. So you can only do it by issuing proceedings.

Alex Watts :

You need to write and set out your losses and request a payment within 14 days or say you will go to Court within 14 days. You should make sure you send this signed delivery and keep a copy.

If they do not payyou then you can issue proceedings in the County Court. You can either do this online at: or by completing form N1 and take it to your local County Court.

The Court will then issue a claim which a copy will be sent to the Defendant who will have a limited time to defend it, if not you can enter Judgment and enforce.

Alex Watts :

Once you have a CCJ then you can wind the company up.

Alex Watts :

But until you have a CCJ upon my reading the contract, there is very little you can do

Alex Watts :

Can I clarify anything for you about this today please?

JACUSTOMER-9e8x0pce- :

One last point, did I do the correct thing by reporting to the Intelligence service of the insolvency gov people and reporting the bribery offence to the police?

JACUSTOMER-9e8x0pce- :

Just give me your opinion and I will leave you an excellent feedback. By the way, the money claim site only works for amounts of up to £100,000.

Alex Watts :

Yes you are correct. It should be considered bribery and if an offence has been committed it should be investigated.

Alex Watts :

£100,000 is a lot of money

Alex Watts :

Does that help?

JACUSTOMER-9e8x0pce- :

Well Alex, as I said before I am actually owed £240,000 but for the administrator I would move the decimal point left - if he will let us put in new management, we can then save the company. But it has to go to administration first. So, given the £100,000 limit it looks as if I will have to go the county court route doesn't it? I put in my claim in December to the company perhaps I'll do it again and give them 14 days more. Is that what you'd advise? Or should I go the on line route and just stick to £100,000?

JACUSTOMER-9e8x0pce- :

Closure of the company is more important than the money.

JACUSTOMER-9e8x0pce- :

That's my final question.

Alex Watts :

Sadly looks like you need to go to Court, otherwise you can't close the Company.

Alex Watts :

I think you may have misread. the small claim limit is £10,000 (ten thousand) not £100,000

Alex Watts :

But you can still issue claim for £240,000 -but it wont be a small claim if defended.

Alex Watts :

Does this help?

JACUSTOMER-9e8x0pce- :

Could I issue 30 small claims for £7,000 for each month of salary accrued?

JACUSTOMER-9e8x0pce- :

Is my claim suitable for Money Claim Online (MCOL)?

Types of claim you can make online

If you are issuing your claim using MCOL it must be:

for a fixed amount of money less than £100,000

against no more than two defendants (people or organisations)

served to a defendant or defendant(s) with an address in England or Wales

JACUSTOMER-9e8x0pce- :

I cut and pasted that from the on line service.

Alex Watts :

Sadly you cant issue lots of £7,000 claims

Alex Watts :

It needs to be a single claim

Alex Watts :

Yes sorry its £99,999 limit. If you want to issue more than this you need to do it as a paper claim so form N1

Alex Watts :

But if you issue 30 claims it will be an abuse of process

Alex Watts :

So you should issue one claim using form N!

Alex Watts :


Alex Watts :

Does that help?

JACUSTOMER-9e8x0pce- :

Yes, Alex. Thank you. I now understand my options and am reassured that I didn't make a dreadful blunder. Mind you, it is now a matter of conjecture as to whether the relevant authorities will act on anything!

JACUSTOMER-9e8x0pce- :

I will plough on with trying to force closure.

Ash, Solicitor
Category: Law
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Customer: replied 1 year ago.

Hello Alex, I believe i already gave you an excellent reference and a bonus. I hope you got it.

Kind regards ***** ***** again.


Expert:  Ash replied 1 year ago.
I did thanks.

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