Hi there, thank you for taking the time to look at my query, I'm hoping you can help My problem in a nutshell:
I set up a business with a friend / business partner in 2010. We are currently 50/50 partners, but he believes that the time & effort he is putting into the business is greater than mine, and would like me to give him a large portion of my shares. There is no share agreement beyond the standard ones supplied for Companies House
I would like some advice as to possible ways forward. I don't view gifting my shares to my partner as an option, as I started the business and have been involved throughout, even if my capacity has not been the same as his, I feel manipulated into this position as he could have made it clear before buying in. However if I'm wrong on this please tell me!
Does my partner have a legal claim to my shares if he feels I am not putting in the same time or effort?
What protection do either of us have?
Can my partner force me in any way to give up some of my shares?
My current view is that if we are not able to negotiate a compromise, one of us can buy the other out, or we can dissolve the company.
Story in more detail:
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Thanks for getting back to me so quickly
I had not considered the share dilution option as I felt manipulated into this position by my business partner; I was not aware that we could construct a shareholder agreement that would protect me
Am I correct in thinking that I could also add a clause that I cannot be forced to sell as a minority shareholder? I am concerned about his motivations as the way this has been approached has been to move in slowly; I would hate to dilute my shares then be forced to sell for a smaller sum
I understand that by owning 75% of voting capital he would be able to vote me out - does this imply that we could set up an arrangement of 50/50 voting shares, with additional non-voting shares that cannot remove me? Essentially having him as both a voting and silent partner
Agreed that a pre-determined way to value the company in the case of fallout is probably a good idea given the circumstance
We could potentially work together but at the moment he will not listen and my input in the company is being ignored, so it seems that unless I am willing to dilute there is no way forward - I have argued that if he wants to feel more valued we should increase his salary and other benefits but he does not agree. I don't know if you have a view on this?
I've rated excellent, thank you for being so helpful with this matter so far
My partner has so far offered a split of 95/5 based on time & effort; I think he is expecting I negotiate him down, but I cannot see how there is any benefit to me continuing that course of action unless I am able to negotiate my required time down to zero (or close to)
I'll take another look at shareholder agreements in the mean-time but expect it will come to closing the company as I do not think he will budge from wanting the dilution of shares