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Best method for retaining minority shareholding

Looking for advice about resigning Directorship of ltd. company and retaining a shareholding

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I'm a 50% shareholder in a small limited company with my cofounder and his wife (who are both Directors who between them own 50%). For various reasons we have decided to go our separate ways and I would like to exit the company.  They wish to continue. We have had an independent valuation carried out but cannot agree on a full buy out price that I agree with - therefore as a compromise we have agreed that a cash payment and myself retaining a shareholding is the best way forward. I would then resign as a Director and become just a shareholder offering me some protection should for example the company be sold in the future to a third party. At the moment it is looking like I will retain a 25% shareholding (or possibly less).

My shares are Class A shares and their's are Class B shares & we have model articles.

My question is whether if I resign as a Director following the other Directors buying half of my shares I face any risks in the future of them issuing new / more shares that could dilute my ownership. Or is there a way to restructure the shares of the company prior to the share sale taking place to avoid this risk?

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By Accountant A
30th Jan 2018 00:44

squirrel27 wrote:

we have agreed that a cash payment and myself retaining a shareholding is the best way forward.

The solicitor documenting your agreement will be able to advise on what protections should be put in place.

Thanks (1)
By atleastisoundknowledgable...
30th Jan 2018 08:26

Do the A & B shares have the same rights? The same voting rights?

If they have the same voting rights, then you need to retain 25%+1 share, so the others don’t have the 75% majority needed to pass a special resolution. If they did have this, they could, for example, vote & pass a resolution to vary the rights of A shares.

I just want to make sure that you are aware that you will probably not get any dividends once you have sold your part shares? They will pass an ordinary resolution (50% shareholding needed) to declare dividends to B shares only.

Thanks (1)
Replying to atleastisoundknowledgable...:
By squirrel27
30th Jan 2018 09:56

Thanks for the feedback. Yes I'm aware that there wont be any dividends - its more to ensure a share of the proceeds should the company be sold in the future given we cannot agree on price for buying all the shares & the prospects of selling the company to a third party right now are limited.

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Replying to squirrel27:
By johngroganjga
30th Jan 2018 10:12

It seems a bit odd that you have apparently agreed a price for one half of your shareholding, but not apparently for the other half.

I am sure you realise that the half you are selling is worth much more (to the purchaser) than the half you are retaining - because of the complete control of the company the purchaser is acquiring with them.

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