Kind of shares to take in an LTD

Kind of shares to take in an LTD

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Good morning all,

I need to determine what kind of shares I demand in a company that I was in as a partner but nothing is legalised yet.

Verbal negotiations have taken place and reached the understanding that I get ten percent cut in the ltd.

The other two (already directors of the LTD that stays dormant for now) seem to try to drag my ten percent and I need to make sure I ask for the right thing in the next meeting. My limited understanding is that I need to ask them for ten percent "ordinary shares" with equal rights to dividents.

My fear is that they will have full control as directors and can pass a resolution that reclassifies my shares and as a result they give out a lot less dividents to a group like "ordinary B" or similar.

Also they are keen to give me that 10 percent without the right of a vote and bind my share to be first sellable back to the LTD. Vote is not important to me but I want to have "ordinary" and not redeemable shares as they can legaly demand it back at any time.

So is it easy for me to ask for "ordinary" shares with equal rights to dividents and ask them to put a clause in the articles of accosiation that states my shares are non-reclassifiable?

I understand for the good will of people trying to help others, and so I would really appreciate any input from experianced/expert people on this site.

Thanks for your time.

P.S. I just need to ask for the right thing as I will have no funds at all to fight in court as I am in with my labour and not been paid for more than a year.

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James Reeves
By James Reeves
16th Sep 2014 08:47

Shareholder agreement

You should insist on a shareholder agreement that protects your rights and interest in the company. You can only do this properly by seeking legal advice from a lawyer who is well versed in company law, and this will not come cheaply.  If you skimp on this cost now you may very well regret it in the future.

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By User deleted
16th Sep 2014 09:52

It's better to have ordinary shares with all the three rights: to dividend, to voting rights and to distribution on winding up. Full 10% makes sense. Do insist on an agreement as said above which asks for quarterly management accounts!

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