A company is owned 51% by Mr A, 30% by his wife and 19% by Mr B.
Mr & Mrs A wish to arrange an EGM with a view to proposing` that the current ordinary shares are offered to be exchanged for A, B & C shares in the same ratios as at present.
Mr & Mrs A have fallen out with Mr B, who will not sell them his shares and I think that they see this as a means of switching off dividends for Mr B.
I assume Mr B would reject the offer and would retain his ordinary shares, but Mr & Mrs A would opt to change to A's & B's.
The have standard Articles and there is no separate Shareholders Agreement.
Is this feasible/Is it legal, given their current shareholdings?
Replies (1)
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Firstly, you can't redesignate the shares as you propose - you can only redesignate a whole class of shares, not some of them to As, some to Bs, etc. (although many people do that and get away with it - but it isn't actually legal). You'll need to issue new shares, and you can do that without his agreement - a special resolution needs only 75%. His redress would then be to go to court under s. 994 (unfair prejudice).