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UKSolicitorJA, Solicitor
Category: Law
Satisfied Customers: 4312
Experience:  English solicitor with over 12 years experience
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Hi there, I started a new software business with a partner

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Hi there,

I started a new software business with a partner 8 months ago, with a 50/50 shareholding. The business is was registered as a limited liability company approximately 6 months ago. At the time of registration, a third shareholder was introduced. As it stands, I own 40% of the company, while the other founder also owns 40% and the third shareholder owns 20%.

I am the CTO and only technical resource in the business. While the other 2 shareholders have had input into some of the ideas and features, I have been solely responsible for the design and implementation of the software product and all things technical relating to the business. Apart from having expenses repaid, none of us have earned a penny from the company.

While the future of the company looks bright, I am starting to have doubts about continuing the working relationship, and I want out.

To the best of my knowledge, my financial contribution has been the greatest in terms of lost earnings while working on the project full-time. I estimate this at £65,000-£80,000.

My question is, who owns the intellectual property, and am I within my right to sell my share in the business? Obviously, I don't want to hold the other shareholders to ransom, but I would like a fair price for my shares.

We are in the process of raising capital and we have on offer of £100,000 for a 10% stake in the company.

Your advice would be much appreciated.

If you do not have a shareholders agreement in place and the Articles of Association of the company do not address the specific issues you have mentioned, then I am afraid it will all depend on what you are able to negotiate and agree upon with your co owners.

IP would normally belong to the company as it would appear that you are all in employment with the company as well as being shareholders.

You may sell your shares to your co owners or to third parties, depending on whether there are any preemption rights and whether the co owners agrees that you may sell your shares to third parties if they do not wish to exercise any rights that they may have of first refusal to purchase the shares.

If the business is valued at say £1,000,000 then your shareholding would be approximately worth £400,000 as the 10% stake is going for £100,000.

Hope this helps

Customer: replied 4 years ago.

We have no shareholders agreement at this point.


Just to clarify with regards XXXXX XXXXX my shares to a third party, are you saying that I can only sell my shares to a third party if they agree to it? What if they don't want to buy my shares and wont agree to letting me sell to a third party?

If there are no preemption rights then you may offer your shares to a third party.

You need to check your Company's Articles to see if there are restrictions on selling to third parties.

Hope this clarifies

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