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F E Smith
F E Smith, Advocate
Category: Law
Satisfied Customers: 9187
Experience:  I have been practising for 30 years.
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I had an opportunity through a friend to invest in a radio

Customer Question

hi, I had an opportunity through a friend to invest in a radio station (which is doing quite well). He is a major shareholder and secured additional funding(investment) from a larger organisation overseas. I found out that I'm not a direct shareholder and that my friend is holding the investment 'in trust' for me. The money has gone into running the station etc but there are technology platform developments in progress and my investment is rolled up with his own. I've asked him for some documentation for how this is all working so that 1) when the investment comes to fruition, I get what I'm owed, 2) if he dies, somewhere it says how many of the shares are mine and 3) if I die the investment is passed on to my family. What kind of document do I need to get put in place or what else do I need to do to make sure this is all clear about what he is holding in trust and that I ensure I get my investment back (if the whole investment comes to fruitionof course) With thanks. Jennie
Submitted: 10 months ago.
Category: Law
Expert:  F E Smith replied 10 months ago.

How much did you invest?

How much has he invested?

How much has the other investor invested?

(You may not know the answers to some of these questions)

Do you know why he has not given you shares in the business?

What arrangements are there for you to get your money back with any profit?

Customer: replied 10 months ago.
I've invested £20k and got 30k shares. Subsequently £25k for 50k shares.
He has a joint holding of 1.8m shares with the tech company (so that company will be reflected as shareholder on the radio station and my friend has an agreement in place with the tech company about his share) He personally controls/has 600k of those shares. My shareholding is within his 600k.
I don't know why he hasn't given me shares in the business, he says its because there are other costs that needed to be paid for (running the station) and that's where the investment went, but the value of that is in his own shares. I do believe he is going to do right by me however, I want to have it in writing.
I have a meeting today where I'll enquire as to arrangements for when the investment comes to fruition. It will come in the form of the radio station being sold for an increase on the value of the shares is the idea.
Expert:  F E Smith replied 10 months ago.

There is no reason for you not to have the shares. Of course, he may simply not have got round to doing the paperwork and issuing the certificates and sending return to companies house but that’s not going to take days.

The paperwork you need other share certificates and confirmation of the change of shareholder companies house.

I don’t accept what he says about other things needing to be paid for. You give him the money, he gives you the shares, if he wants to then lend the money to the radio station, he is at liberty to do so and the radio station can pay him back whenever.

In the short term, it’s probably going to take longer to do a deed of trust whereby he holds the shares on trust for you albeit that they are in his name, than it is to simply sell some of his shares to you. I would want that document as a minimum.

Can I clarify anything further for you?

Please rate the service positive. It doesn’t cost you anything but helps me greatly.

We can still exchange emails.

Best wishes.


Customer: replied 10 months ago.
Sorry, that isn't really helping me. I know I should have a share certificate but I don't and won't be getting one. I think I need to consult someone face to face and go through the whole scenario, unfortunately I don't think this will get me what I need. Thanks.

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