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Joshua
Joshua, Lawyer
Category: Law
Satisfied Customers: 31744
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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I own 15% of the sares of a limited company. Another person

Customer Question

Hi,
JA: Hi. How can I help?
Customer: I own 15% of the sares of a limited company. Another person owns the other 85% of shares. He wants to turn the limited company into a non-profit organization. My question is, can he do that without my consent?
JA: Where are you located? And have you consulted a local lawyer?
Customer: I'm located in London and this is the first time I'm recurring for a legal advise on the matter
JA: Has anything been officially filed? If so, what?
Customer: No, it hasn't been yet. However he said he'll speak with our accountant to do so
JA: Is there anything else the Lawyer should know before I connect you? Rest assured that they'll be able to help you.
Customer: I don't think so. This is my main concern.
Submitted: 15 days ago.
Category: Law
Customer: replied 15 days ago.
File attached (PMM3Q4T)
Expert:  Joshua replied 15 days ago.

Hello and thank you for your question. My name is ***** ***** I will be very pleased to assist you. I'm a practising lawyer in England with over 15 years’ experience. Please be aware that although I will endeavour to reply to you promptly, I am also in full time private practice and so I may not be available to respond immediately and it may also take me a few minutes to prepare a reply. The site will notify you as soon as I respond. I look forward to working with you to answer your question fully.

Expert:  Joshua replied 15 days ago.

  1. I am sorry to read of the above. May I confirm if you have any form of shareholders agreement or joint venture agreement between you please?
  2. is he proposing to buy out your shares as part of the proposal please?

Customer: replied 15 days ago.
We don't have any shareholder formal agreement... the only agreement is that I'm (or was) in charge of the business day-to-day management and finances management.
He hasn't proposed to buy my shares, however I want to sell it. Either for him or someone else... however if he can transform the limited company into a non-profit the shares will no longer have a market price... in fact, as far as I know, non-profit organisations don't have shares at all
Customer: replied 15 days ago.
Thank you for your help and assistance Joshua... I understand you must be very busy.
Expert:  Joshua replied 15 days ago.

thank you. With the proposal reduce the value of your shares? I presume that would be the case given the nature of the proposal

Customer: replied 15 days ago.
he wants to turn the company into a non-profit mainly to avoid paying taxes... I don't agree with that, so I want to sell my shares and get out of the business. So I need to know if it's possible for him to change the reason of the business even without my approval
Customer: replied 15 days ago.
I'm guessing he couldn't as this would affect directly all shareholders. But I'm not sure as he's the director and the only person with significant co
ntrol
Expert:  Joshua replied 15 days ago.

because he controls more than 75% of the shares, he is able to pass a special resolution changing the objects of the company and in this narrow sense, he has the powers as a shareholder to make these changes. However, there is a competing fiduciary duty to act in the interests of the company and by extension, the shareholders at large and so on action which favours a majority shareholder at the expense of a minority shareholder (ie. is not in the interests of the shareholders overall) is likely to be contrary to this producer obligation and liable to a challenge by a minority shareholder under a derivative action.

accordingly, in order to avoid a breach of fiduciary duty in this respect, if the majority shareholder wishes to take an action which significantly prejudices you as a minority shareholder, they should consider making an offer to purchase your shares at market value or else, they make themselves potentially liable for loss you suffer as a result of an action they take to your disadvantage in this respect which is an action you could consider bringing in court if necessary

Customer: replied 15 days ago.
Okay Joshua, thank you!
So before he starts this process I will send him an official written notice (via email) about my intentions to sell my shares and per stated o the certificate of incorporation of a limited company, I must give him priority on buying the shares. If doesn't want to do so, I can sell for someone else on the market price.
Expert:  Joshua replied 15 days ago.

providing there are no restrictions on the shares it is open to you to market the shares for sale, though of course you may need to consider whether you would need to disclose the proposals of the majority shareholder in particular if they have been put formally which may limit the market for the shares.

Expert:  Joshua replied 14 days ago.

I hope the above is of some assistance but if you have any further questions, please revert to me.

Expert:  Joshua replied 14 days ago.
I trust the above was of assistance and that you do not have any follow up questions for now. If there is anything else I can help with please reply back to me though.

Expert:  Joshua replied 13 days ago.

I hope I was able to answer your question. If you would like to ask me another question in the future, you can add me as a favourite Expert. You'll have the option to do that on your "My Questions" page if you choose to rate our interaction or you can request me by name if you wish. Thank you again for visiting JustAnswer and see you again in the future I hope.