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Buachaill, Barrister
Category: Law
Satisfied Customers: 12286
Experience:  Barrister 17 years experience
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We have a limited company with 2 directors and 5 equal

Customer Question

Hi, we have a limited company with 2 directors and 5 equal shareholders (the 2 directors are 2 of the 5 share holders) We don't pay dividends as it is reinvested into company. What rights does a 20% shareholder have over the company?
JA: What state are you in? And have you consulted a local attorney?
Customer: We are in United Kingdom
JA: Has anything been officially filed? If so, what?
Customer: no
JA: Anything else you want the Lawyer to know before I connect you?
Customer: no
Submitted: 5 days ago.
Category: Law
Customer: replied 5 days ago.
When will I get an answer?
Expert:  Buachaill replied 5 days ago.

Hello, and thank you for your question. I am your Expert and I will provide the answer you require.

Expert:  Buachaill replied 5 days ago.

1. A 20% shareholder has the right to vote his shares in general meeting and to see the Annual Accounts of the company. Normally, they would have the right to a dividend if a dividend was declared but that is not the case here. However, a 20% shareholder has no automatic right to be a director. That depends upon being voted in, as a director, at the annual General Meeting. Additionally, a 20% shareholder has no automatic right to be bought out if he wishes, if he is unhappy with the running of the company. Instead he has to petition the court under section 994 of the Companies Act, 2006, for relief against unfair prejudice and have the court order that his shares get bought out. Ultimately, the 20% shareholder has no rights over the company but simply has rights in the company, namely, the right to participate. If there is any particular matter you would like to address, I am happy to help further.

Customer: replied 5 days ago.
Many thanks for reply. Please can you let us know if as directors we have the right to force sale of one of the 20% holder of the shares and how the shares are valued ?
Expert:  Buachaill replied 5 days ago.

2. There is no power given in Company law to forcibly purchase the shares of a 20% shareholder. Any such sale must be by agreement and any valuation must be at a price at which all parties are happy.