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Jo C.
Jo C., Barrister
Category: Law
Satisfied Customers: 32086
Experience:  Over 5 years in practice
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As a 15% shareholder in a private company, where the other

Customer Question

As a 15% shareholder in a private company, where the other 85% shareholders (four of them) are from the same family and work in the business do i have any say in fixing directors remuneration or in the distribution by way or bonus rather than dividend?
Submitted: 2 years ago.
Category: Law
Expert:  Alex J. replied 2 years ago.
Thank you for your question and welcome.
My name is ***** ***** I will assist you.
Do you have a shareholders agreement?
Kind regards
Customer: replied 2 years ago.
No. This is a family company started in 1967 in which my brother over a period of time was given 85% before my father died in 1981 and i was given 15%. My brother died in 2012 and his three sons now run the business and have 22.25% of the shares each. His dauughter has 22.25%. I still have 15% but have not in 15 years or more received any payment or dividend. The company is worth probably £3m to £4m. I do not need any income from it, but should like to be clear what rights I may have as profits are taken in directors' bonuses and there is no consideration given to dividends. I want clarity as my own children will in due course inherit my shares.....
Expert:  Alex J. replied 2 years ago.
Hi, Thank you. You do not actually have a right to influence the director remuneration, the other four can out vote you on this point as they hold more than 75%. Have all the company profits been taken as bonuses? Are the bonus paid under employment contracts? You may have protection under S.996 of the Companies Act 2006 - as this is an unfair prejudice of minority shareholders.
Customer: replied 2 years ago.
There are no employment contracts. They wish to buy out some preference shares which they hold, and i do not, at an inflated value. Am I right in assuming that they can do that whatever my view? As they can pay themselves what they wish, it seems my shares have no value really. Is that a fair summary
Expert:  Alex J. replied 2 years ago.
Hi, Thank you. They cannot act fundamentally to the detriment of the company as a whole. By having a buy back of the preference at an inflated price they are prejudicing you as a minority shareholder - is there any possibility they would buy you out?