Legal Question in Business Law in United Kingdom

Re: Getting out of a partnership

As a shareholder in a private company, if the company has a value, this value will be reflected amongst the shareholders in the proportion in which they hold their shares. Normally on retirement of a working shareholder he will sell his shares to the other owners at an agreed price or, if the price cannot be agreed, normally a value worked out by the company�s auditors. In certain circumstances the company itself can buy back the shares and once paid for the shares will be cancelled leaving the company in the hands of the continuing owners.

In exceptional circumstances where the parties cannot agree about payments due to the retiring party, one or other party has to ask the court for the company to be wound up, the assets sold and once the debts paid, the balance divided between the shareholders.

It is important to review the Articles of Association of the company as they may contain specific provisions about selling shares.

There are a number of technical legal and tax issues arising on a shareholders retirement and the advice of solicitors and accountants experienced in these areas should be sought.