Myself and a colleague own 60% (30% each) of a private limited company with an authorised and issued share capital of £200k.
I am not a director or involved in the running of the business at present but do not want us to lose control. The chairman has approached me to say that they want to remove the authorised share capital limit as allowed under the 2006 Companies Act at the AGM in January 15. I presume that this will require a 51% majority to pass the resolution (possibly 75%) and if passed would enable the current board to dilute our 60% controlling interest to below 50%.
The directors claim that they want to raise more money by issuing new shares. It is my view that they want to dilute our shares below the 50% which would rendering them worthless due to nature of the business. It is also extremely unlikely that the company will ever pay a dividend.
My questions are :
1. Presumably the company can issue a different class of share i.e. non voting
2. Is it still possible to pass a resolution that limits the increase in the amount of authorised share capital to say £220,000 on the agreement that myself and my colleague bought 60% of the new shares to maintain that same status quo.
3. Any other suggestions
Any feedback would be appreciated.
Replies (4)
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Or a company lawyer - as your question raises complex questions about protection of shareholder rights.
Agree with the above
How about offering your help to others sometime, as you have only ever asked questions on here - take, take, take !. After all it is better to give than receive.....................
I agree with the responses above
However, the removal of the cap on share capital is not the problem. The issue of new shares is where you need to protect your position.