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  • FIRST POST
    • Adrian6017
    • By Adrian6017 16th Jul 17, 12:32 PM
    • 2Posts
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    Adrian6017
    Restrictions on Selling Shares
    • #1
    • 16th Jul 17, 12:32 PM
    Restrictions on Selling Shares 16th Jul 17 at 12:32 PM
    Hi
    My father-in-law has shares in a business and is looking to sell them. He has been informed that the board recently passed a motion restricting the amount sold to a certain value per year. This would mean that it would take 40 years to sell all of his shares!
    Is this legal?
    Thanks
Page 1
    • bigadaj
    • By bigadaj 16th Jul 17, 4:15 PM
    • 10,693 Posts
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    bigadaj
    • #2
    • 16th Jul 17, 4:15 PM
    • #2
    • 16th Jul 17, 4:15 PM
    Waht company is it, are they private or listed?
    • Adrian6017
    • By Adrian6017 16th Jul 17, 5:58 PM
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    Adrian6017
    • #3
    • 16th Jul 17, 5:58 PM
    • #3
    • 16th Jul 17, 5:58 PM
    Private I believe
    • bigadaj
    • By bigadaj 16th Jul 17, 7:39 PM
    • 10,693 Posts
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    bigadaj
    • #4
    • 16th Jul 17, 7:39 PM
    • #4
    • 16th Jul 17, 7:39 PM
    Well there's probably little that he can do.

    He can check the articles of association and other legal documents that regulate how the company was formed and how it can act, but if that's the decision of the board then that's probably it.

    The other element is obviously the price of the shares, can be difficult to value these fairly so if he can sell 2.5% per year at a decent price could be worse.
    • AnotherJoe
    • By AnotherJoe 16th Jul 17, 7:53 PM
    • 7,591 Posts
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    AnotherJoe
    • #5
    • 16th Jul 17, 7:53 PM
    • #5
    • 16th Jul 17, 7:53 PM
    Who is he planning to sell them to?If its private the shares may be worth little if anything.
    • Apodemus
    • By Apodemus 17th Jul 17, 7:13 AM
    • 953 Posts
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    Apodemus
    • #6
    • 17th Jul 17, 7:13 AM
    • #6
    • 17th Jul 17, 7:13 AM
    As mentioned above he needs to check the paperwork. Is he a Director? I would be surprised, though if any company could retrospectively decree that privately owned shares could not be traded. Finding a buyer is very likely to be impossible and the Board might limit Directors' share sales/purchases, but I would have thought that restricting ability to sell would stray into the territory of human rights and freedom to do what you wish with your own private property.
    • Biggles
    • By Biggles 17th Jul 17, 8:52 AM
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    Biggles
    • #7
    • 17th Jul 17, 8:52 AM
    • #7
    • 17th Jul 17, 8:52 AM
    'Recently'? I should have though that if he bought his shares before the passing of the motion, they couldn't be restricted in that way.

    Anyhow, how could they stop him (if, that is, he has found the hypothetical 'willing buyer')?
    • bigadaj
    • By bigadaj 17th Jul 17, 6:53 PM
    • 10,693 Posts
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    bigadaj
    • #8
    • 17th Jul 17, 6:53 PM
    • #8
    • 17th Jul 17, 6:53 PM
    I think that rather than restricting the sale of the shares, they are effectively saying that they will only buy back a certain amount every year, presumably at a price they fix as fair valuation with Hmrc for example.

    There's nothing stopping him seeking them to a third party in all probability, but they are probably near worthless to anyone else, so he can't realise that value to any great extent.
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