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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3890
Experience:  Solicitors 2 years plus PQE
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I'm going to be taking over a business that I have been

Customer Question

I'm going to be taking over a business that I have been offered 50% shareholding and the director's position I would like to get a contract drawn up to say that the current owner who will be remaining as a 50% shareholder cannot shut down the company without my say so or do anything detrimental to the business and and that all turnover from the company gets divided equally 50/50 between me and him all property of the company will remain company assets
Submitted: 2 months ago.
Category: Law
Expert:  Alex J. replied 2 months ago.
Thank you for your question and welcome. My name is ***** ***** I will assist you. You could create a shareholders agreement to agree commercial terms however-
- As long as you both have the same class of shares you would not be able to shut the company down without mutual agreement as a matter of law - it would require a special resolution - at least 75% of the shareholders voting in favour;
- Dividends are divided equally anyway assuming the shares are all the same class. You would still need the dividend to be approved by the board and then approved by shareholder resolution (ordinary resolution) - it is not possible to declare a dividend for one shareholder and not the other unless they have different classes of shares;
- If the company assets are recorded in the accounts and there is proof of ownership - purchase receipt or contract - you do not need this acknowledgement from the shareholder.
What assets does the company have?
A better way to secure yourself would be insist that you have joint control of the bank account and financial statements?
I look forward to hearing from you.
Kind regards
AJ
Customer: replied 2 months ago.
The whole reason I am getting 50% of the company is because the current owner of the company is moving abroad to set up company out there all the equipment that the company own he has bought over the years it is the sound and lighting hire company that do from weddings all the way up to multi thousand people festivals I I just need something that states that he cannot shut the company without my say so on paper for him to sign and to say that all the equipment is being signed over with this we will both have access to the bank accounts although I will be taking all the bookings and dealing with all the accounts
Expert:  Alex J. replied 2 months ago.
Thank you. Is he incorporating a new company in Spain? Kind regards AJ
Customer: replied 2 months ago.
No it is a completely separate business altogether
Expert:  Alex J. replied 2 months ago.

Thank you. This could be done by shareholders agreement. Even if you wanted to agree that he cannot stop trading without your consent, you would not be able to force him to carry on trading. If it is a separate business, is it using equipment owned by your company?

Customer: replied 2 months ago.
No completely different company has nothing to do with company I am taking over
Expert:  Alex J. replied 2 months ago.

Thank you. If that is the case he has no power to stop the UK company from trading. If he stops supporting you, you could look for a new supplier in Spain? Kind regards AJ

Customer: replied 2 months ago.
What are you talking about Spain for Spain has nothing to do with my company that is running in the UK
Expert:  Alex J. replied 2 months ago.

Thank you. My apologies - assuming the Spain business has no impact on the UK business, and your partner is based in Spain - he will have no power to stop your business from trading. You will not need an agreement to ensure the company wont stop trading. Will you be responsible for the day to day management of the company? Kind regards AJ

Customer: replied 2 months ago.
OK yes I will be running day to day operations
Expert:  Alex J. replied 2 months ago.

Thank you very much. If that is the case - if you are England and are responsible for the day to day management - he cannot wind the company operations down without your consent. The company is essentially deadlocked at 50/50 - you cannot change the status quo. What I would do is ask him to sign an agreement - showing you have all day to day management decisions. Any excessive spending - i.e money not in the ordinary course of business can only be paid by agreement?

Customer: replied 2 months ago.
Perfect can you please write something for me to get him to sign
Expert:  Alex J. replied 2 months ago.

Thank you. You would need a whole shareholders agreement - the best one to use would be the standard template on Simply Docs https://simply-docs.co.uk/Shareholder_Documents/Shareholder_Agreements

We are prohibited from drafting documents on this site. If you want to talk through the document I am happy to do so on this thread. Kind regards AJ