Legal Question in Business Law in United Kingdom

Re: Shareholder/Director rights in a limited company

1. No one owns the majority because no one owns 50% + X. If the two of them vote in concert, then factually they do have the voting majority (66%).

2. Accounts would normally be passed by the board of directors and approved of by the shareholders with simple majority (50% plus one share).

3. Management decisions would be decided by the board of directors. Unless the memorandum and articles of association would prescribe otherwise (which they often do), the shareholders would be able to appoint directors by simple majority in which case they could, in theory, determine the day-to-day business of the company without your consultation (assuming that you would seek representation on the board of directors as well). It needs to be borne in mind though that directors owe their duties first and foremost to the company itself. If their interests as shareholders would diverge from these interests, and they would (ab)use their majority position to force things through against the best interest of the company, you may have means to opine against.

4. Restrictions as to the sale of shares will normally be contained in the memorandum and articles of association. Often, existing shareholders would have preemptive rights, etc. Also, normally, the board of directors will have to be notified.

A proper assessment will require the review of the memorandum and articles of association and, if existing, a shareholders agreement.

I'd be happy to review this and recommend English counsel if necessary.

Kind regards,

Volker Hirsch

Re: Shareholder/Director rights in a limited company

Most decisions by shareholders of a company are taken by simple majority i.e above 50%. Your relatives together therefore control a majority of the company. Some actions require approval of a �special resolution� . This requires 75% and no special resolution could be passed without your vote. The accounts of the company should be circulated and voted on at the annual general meeting of the company. The question whether your relatives can dispose of some of their shares without your permission is governed by the Articles of Association of the company and any shareholders agreement.

The Companies Acts and company law in general protect minority shareholders in various different ways and therefore if you felt that you were being treated unfairly or the company was not being run properly you should take advice from ourselves or any other solicitor with experience of dealing with shareholder disputes in the Companies Court.

In order to avoid costly legal proceedings you should try and discuss your concerns with the other shareholders and possibly engage a Mediator to help you if you cannot reach an agreement