Share Rights

acsacsacs

Another one.....

I have been asked by a client to assist with the current shareholding classes and rights.

Ok so the company has say 200 Ordinary A shares, split between 3 people

Person A - 80
Person B - 80
Trust - 40

I need to split these shares out a bit more with a few more people but the client wants me to ensure that if any of the directors want to sell their shares then Person A has the first opportunity to purchase them.

Person A also needs to be allowed to keep control at all times. He worried that if we introduce Persons C & D then with the combined strength they could oust Person A.

Now I believe this is more of a solicitor issue and not an alteration in the Articles, although new articles could be issued stating these facts. (any links would be appreciated)

I know I could always create a different type of share, but want to avoid this if I can.

Any advice to my mumbled question?

wildgoose1uk

You cannot just split the shares out a bit more...... They belong to the shareholders. The mem & arts will state how many shares can be offered. They are what gives the directors their power and to action anything outwith those powers would be ultra vires.

Youwill be able to find a list of Chartered Secetaries in Practice close to you on the icsa website - They should be able to help you.

As you have not suggested a new share issue I suspect you have already reached 100% of the shares permitted to be issued in themem & arts. The mem & arts will state how they can be altered but I would not envisage that this would be that difficult ans then you could arrange the share issue.

Personally speaking, if I was to consider buying any shares where the company selling me the shares was tryingto dictate who I sold them on to then either I owuld have to be very sure of a good return for my investment or it would have to be quite heavily discounted.

In the share issue you would of course need to ensure that Person A still had the majority shareholding takig into account possible alliances between shareholders includingt the trust.

In any case Person A could not be ousted in terms of shareholding as the shares are owned by him. If he holds a position on the Board such as Chair then that would be different. If he holds a position onan employed basis within the company then that is of course different again.