Legal Question in Business Law in United Kingdom

Division of company shares

I am one of three equal directors of a small limousine company, currently slightly low on funds.

The other two directors are in a fanancial situation to inject more money in to the company and have said they will do to help the company along in this slow period. And they will divide up the shares to make themselves the two major shareholders.

As i am not able to raise additional funds, Can i stop this from happening ? what are my options.

Do i have to sell or redeem any of my shares.

please help thankyou.


Asked on 3/19/07, 10:36 am

1 Answer from Attorneys
Richard Howard Richard Howard & CO

Re: Division of company shares

The Articles of The Company, and any Shareholders Agreement, will determine if any shareholder has the right to dilute another and the relevant mechanism. You need to read these and/or take advice on them.

It may be possible to negotiate with the other shareholders to see if they are prepared to invest the money without diluting you e.g. through shareholder Loans or Preference Shares.

There are various Shareholder protection legal provisions which you may need to take advice about if you cannot negoitiate a satisactory settlement.

Any new arrangement amongst the shareholders should be properly documented in a Shareholder's Agreement to avoid uncertainty in the future.

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Answered on 3/19/07, 11:10 am


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