Can a nominal future value of shares be set?

Can I shareholders agreement set the price of shares following death of a shareholder?

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I am hoping you can help me.

My best friends wife Lisa has recently died of aged 40.  She had shares in a family business comprising 10% of the ordinary shares and 20% of recently issued alphabet shares.  18% of the shares in total. 

Lisa believed that her shares would pass to her husband Ian.  She told him so explicitly many times.  Lisa was the principle breadwinner, Ian  also works for the family business on the factory floor.

They have a will in place, signed immediately after their marriage two weeks before she died, the shares are not explicitly listed but Ian is the beneficiary of all her assets other than a few sentimental items of no value.

Lisa's  sister is the executor of the will.  She also has shares and stands to benefit if the shares are not transferred to Ian. The company has £1 500 000 on the balance sheet and will likely be sold in the next few years.

Lisas sister has told ian that they all signed an agreement, presumably a shareholders agreement (no record of such an arrangement is mentioned in the articles of association) where the shares would be “valued at £1 and transferred back” (I assume she means  to either the company or the other shareholders).

I assume the agreement Lisa's sister is referring to is a pre-emption right or a compulsory transfer.  I believe that it is likely lisa signed such an agreement without understanding or bothering to look at what she signing.

I have one question

Is such an agreement actually valid?

It would seem crazy to me that you can set a future value of shares. Especially a £1 value of shares that are worth between £200 000 and £300 000.

I don’t want Ian to poke the bear if such an agreement is valid or likely to be valid, especially if its possible lisa did not even have to have signed such an agreement. 
If the agreement is not likely to be valid then we will do whatever is needed to ensure he gets what he is entitled to.


Any advice  would be greatly appreciated


Replies (3)

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By lesley.barnes
20th Jun 2024 14:13

Your friend needs to get a copy of the signed agreement and a copy of the will and consult a lawyer who specialises in Company Law for their view.

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By paul.benny
20th Jun 2024 16:24

In principle, the arrangement you describe is possible and legal. It would not have to be in the Articles.

I agree with Lesley on the need for legal advice but I think the questions are whether claimed agreement actually exists. And if so, did Lisa know of her possible early death when signing it, did she know what she was signing, was she properly advised etc. It does slightly smack of sister trying to take the wee-wee.

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By FactChecker
20th Jun 2024 18:45

Definitely a case for a lawyer.

An SHA (if it exists) is unrelated to a Will ... in that the Will disposes of Assets (after settling Liabilities) of the deceased's Estate - which may or may not have included the relevant Shares.

There's the possibility of an 'interesting' conundrum for the lawyer ... if death is the trigger under the SHA for whatever a 'transfer back' means AND of course death is also the trigger for creating a deceased's Estate - then which trigger takes precedence?

Also, if death was not unexpected but due to a debilitating disease, there's the possibility of someone suggesting the deceased was not 'of sound mind' when either or both documents were signed (which may be a poisoned chalice if there's a substantial duration between the sets of signings).

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