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Can a ltd company stop dividends then start again

Dividends stopped then started again a year later under a different class

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Only 2 shareholders 80/20. Both Dividends were stopped. A new dividend was started again a year later, but as a different class so only the 80% shareholder receives them. Is this legal. 

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By Anonymous.
05th Aug 2020 01:11

Yes probably but you need to speak to a solicitor (and read your employment contract and shareholder agreement).

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By SXGuy
05th Aug 2020 06:52

Are these "possible" dividends? (joke related to another post)

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Replying to SXGuy:
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By Sarah me
05th Aug 2020 08:50

No it’s not related

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RLI
By lionofludesch
05th Aug 2020 08:08

Maybe, maybe not.

Were these shares originally the same class ?

How did they become a different class ?

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Replying to lionofludesch:
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By Sarah me
05th Aug 2020 08:52

Yes they were originally the same class and both receiving dividends. All dividends were stopped Oct ‘18 and a new class of share was formed Oct ‘19 where just the 80% shareholder receives a monthly dividend.

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Replying to Sarah me:
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By Sarah me
05th Aug 2020 08:56

And it was the 80% shareholder that held a meeting to decide he’s create this new class of share. He’s the only director.

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Replying to Sarah me:
Hallerud at Easter
By DJKL
05th Aug 2020 08:58

How was this new class of shares formed, what process led to the issue of said shares ? (new issue/share swap/what?)

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Replying to DJKL:
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By Sarah me
05th Aug 2020 09:07

He had a board meeting and it said:
Introduction of B shares into the current company set up. He voted yes (my position doesn’t allow me to vote).

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Replying to Sarah me:
Hallerud at Easter
By DJKL
05th Aug 2020 09:32

So he circulated a timely notice of an EGM, with resolutions?

Why do your shares not have a vote, that suggests there were two classes of share prior to said meeting.

This is one for a solicitor versed in both company law and employment law.

I am sensing that either you are not fully on top of what happened or your fellow shareholder does not do detail, if the latter then consult with a solicitor, clarify the facts, and then let your opponent make his/her own mistakes to be subsequently punished- whilst you are weak vis a vis the shares (though can be long term a thorn in his/her side) you hold far more power as an employee if he/she is a tad Rambo.

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By Paul Crowley
05th Aug 2020 10:32

My prediction is that your shares will never again have dividends paid.
Better off just trying to sell them to other shareholder.
Does the company owe you any money?
What did the shares cost?

At 20% you have close to zero power

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Replying to Paul Crowley:
Hallerud at Easter
By DJKL
05th Aug 2020 10:38

Nuisance value- audit every year.

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Replying to DJKL:
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By Paul Crowley
05th Aug 2020 11:06

Which director ignores. No cost effective procedure to make him comply.

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Replying to Paul Crowley:
Hallerud at Easter
By DJKL
05th Aug 2020 11:20

Which would of course likely help with any later oppression of minorities action raised.

Minority shareholders can be a right pain, I know as was on the receiving end from a 25% shareholder for years, he spent a lot of his time making trouble via his solicitors- of course, we eventually bought him out,that it is where likely 90% of these end up,but the price we paid was not what the shares were worth it was the value to us of removing the irritant.

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Replying to DJKL:
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By Paul Crowley
05th Aug 2020 13:12

There is exactly the issue
Need solicitors to achieve anything. Need to consider cost against benefit given that a one man company could be valueless before the first solicitor's letter in in post.

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By fawltybasil2575
05th Aug 2020 17:28

@ Sarah me (OP).

As DJKL (his 9.32 post) says, you crucially need to contact a solicitor with knowledge of both employment law and company law, due to your related post here:-

https://www.accountingweb.co.uk/any-answers/redundancy-of-only-employee-...

In implying no criticism, one would need a fuller understanding of the circumstances (including the length of your employment, the date on which you acquired the shares, the cost of the shares, your current employment earnings, the nature of the business, the net assets of the company etc etc etc) before one could seek to determine whether one is best advised to adopt (i) a confrontational approach or alternatively (ii) a conciliatory approach (or something in between).

If, as seems possible, you are not especially well versed in company law, then an hour’s Googling “Rights of Minority Shareholders” will give you a flavour of your rights as a 20% shareholder (such rights are relatively low). Likewise, an hour’s Googling “Rights in Redundancy” will give you a flavour of your rights as an employee (links to both GOV.UK and ACAS should be studied).

An initial meeting with a solicitor (as per my opening paragraph) with a prepared list of questions, including “Is there anything which I should do immediately?” is your next step.

As ever, one must draw an equation between the amounts at issue and legal costs, before committing yourself to such legal costs.

Basil.
EDIT. I posted the above at approx. 11.30 today but, upon seeking to add an "EDIT" half an hour or so later, I received a standard site message that my post was being reviewed before re-appearing on the thread (a somewhat frustrating experience, encountered previously, understood to automatically kick in when a post appears longer than normal). With apologies to any contributor(s) inconvenienced thereby.

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Replying to fawltybasil2575:
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By Paul Crowley
05th Aug 2020 20:50

Good to see you back
As always complete, accurate and edifying

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