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What to do with an absent shareholder

What to do with an absent shareholder

A limited company (micro business) has 3 directors each holding 1 share and each having paid £5,000 for their share.

One of the directors has stopped having anything to do with the company and has moved away, the other directors do not know how to contact him and are wondering what they can do with his shares ie they want to get "rid of him". The company is not yet profitable and no dividends have been paid.

There is no shareholder agreement in place and their articles of association are those which companies house provide and as such does not include any reference to resolve this scenario.

I realise that they should seek legal advice, but just to assist my own understanding, I was wondering what are their options? Could the 2 directors who are left create a new company and move the trade into that company, thus making the previous company dormant?

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29th Feb 2016 12:51

Hmm
Always seems odd when people who were close enough to go into business together suddenly drop off the face of the earth, change all their phone numbers and email addresses, disappear from Facebook and LinkedIn, cut off contact with mutual acquaintances and can't possibly be tracked down when it comes to paying them...

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29th Feb 2016 12:59

What to do with an absent shareholder

Put him in the longboat until he's sober?

Or am I getting confused with something else...?

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29th Feb 2016 13:03

Legal advice is the only sensible answer.

If they set up a new company doing exactly the same thing that turns out to be successful, the shareholder might surface and make a claim in the new company.

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29th Feb 2016 13:13

Legal advice is the correct answer

cheekychappy wrote:
Legal advice is the only sensible answer. If they set up a new company doing exactly the same thing that turns out to be successful, the shareholder might surface and make a claim in the new company.

 

Yes your right, legal advice will be my answer. However, as the remaining 2 directors have diversified and the trade they are doing now is completely different to that which the original company was created to do, I think creating a new company which is conducting a separate trade is an option. They will have to be prepared to write off the loss they had incurred in the original company.

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29th Feb 2016 15:03

Little you can do apart from when declaring dividends, to credit the absent shareholders' Directors Loan Account with their proportion.

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01st Mar 2016 11:07

They don't hold 75% so a dramatic change to the business would be open to challenge.

Why not enjoy the status quo? it doesn't cause any problems. The absent shareholder may also own shares in M & S, but they don't worry about him.

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01st Mar 2016 12:39

If the old company has no value (you say it has made losses) what I would do is take advice from a good company lawyer on how the company can be wound up in a way that would be robust enough to withstand any challenge from the absent shareholder if he were ever to turn up and take issue with what had been done.

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