Share this content
13

Private Company Forfeiture Shares

Didn't find your answer?

We have a private UK company whereby one shareholder (although fully paid shares were issued) never ended up paying for their shares. Now we would like to forfeit/cancel those shares.

The Shareholders Agreement is silent on the matter. The Articles (which are slightly modified from the Model Articles) are also silent as to forfeiting shares. Though Article 21 of the Model Articles would still apply which would mean I think that forfeiture of its shares can not apply to private companies.

Is there another easy solution to effect the shares from the one shareholder is forfeited/cancelled for non payment?

 

Replies (13)

Please login or register to join the discussion.

avatar
By zebaa
15th Aug 2020 11:34

A lot will depend on the £££ involved. Given the lack of other information I'd say there is no easy way, depending on the definition of 'easy'.

Thanks (0)
avatar
By tannaroo
15th Aug 2020 18:46

We are talking about £20k worth of shares

Thanks (0)
avatar
By zebaa
16th Aug 2020 17:09

Getting a lawyer is a good first step. Other things I suggest is that the directors 'Call' for payment. If he pays then your problem continues. If there is no majority of directors your problem continues.

If he does not pay then you issue court action for the £20k. At this point it would be good to have a long chat with the non-paying shareholder. Try and work something out. Seems to me, nothing is going to be easy though.

Thanks (1)
avatar
By tannaroo
16th Aug 2020 19:58

Thanks.

Any other ideas ?

Thanks (0)
Replying to tannaroo:
Psycho
By Wilson Philips
16th Aug 2020 20:05

I would suggest that the first line of the preceding post is the best idea by far.

Thanks (0)
Replying to Wilson Philips:
avatar
By tannaroo
18th Aug 2020 09:44

Wilson Philips wrote:

I would suggest that the first line of the preceding post is the best idea by far.

3 lawyers that I have contacted don't know the best way forward. it seems to have perplexed people.

Thanks (0)
Replying to Wilson Philips:
avatar
By tannaroo
18th Aug 2020 09:44

Wilson Philips wrote:

I would suggest that the first line of the preceding post is the best idea by far.

3 lawyers that I have contacted don't know the best way forward. it seems to have perplexed people.

Thanks (0)
avatar
By Tax Dragon
18th Aug 2020 10:07

Remember Jarndyce v Jarndyce. If the shares are only £20k, perhaps the owner would be willing to sell (and for the amount owed to be netted off against the proceeds); might be best all round (except for the lawyers)?

Thanks (0)
Replying to Tax Dragon:
Hallerud at Easter
By DJKL
18th Aug 2020 10:31

From the perspective of the lawyers involved Jarndyce v Jarndyce had the most sublime outcome- why leave money to be frittered away by the beneficiaries.

For £20k the nearest we would be getting to a solicitor is a "free" call to see if they had any cunning plans they could offer without billing us. We know a lot of solicitors with a lot of firms so a flick though the address book is probably as far as we would take this, I doubt we would instruct- the only thing worse that property solicitors are corporate solicitors and the only thing worse than them are the litigation team.

Thanks (0)
avatar
By tannaroo
18th Aug 2020 10:11

Yes but probably the crucial element which I thought I had included in my original post which I didn't (so apologies) is that the shareholder passed away about 6 months ago and is non UK resident and we have no means of finding out their representative.

Thanks (0)
Replying to tannaroo:
avatar
By Tax Dragon
18th Aug 2020 10:18

Why the rush? Mightn't the representative contact you in due course to ask for the shares to be reregistered to the heirs, or similar?

Thanks (0)
Replying to tannaroo:
Hallerud at Easter
By DJKL
18th Aug 2020 10:36

Maybe a tracing agent might be the way to go, lot cheaper than a solicitor.

https://tracingbeneficiaries.co.uk/

Thanks (0)
Replying to DJKL:
avatar
By Tax Dragon
18th Aug 2020 10:42

Plus… who told them the chap/chapette had died?

Thanks (0)
Share this content

Related posts