Ordinary shares

missingmum

I'm not sure if this is the right place to post this, in fact I'm not even sure it is really something that can be answered on the forums at all. Anyway I'll give it a go.

Further to my post earlier this month, the company I work for are on the "bones of their backside" and it is looking increasingly likely that the company will have to enter voluntary liquidation possibly as early as next week. Several "plans" are proceeding to try and save the business, at least get us over the immediate threat, but time is quickly running out. The company is a private limited company.

I am a shareholder of this business, 10%, which equates to 10 ordinary shares at £1 each. I was given these shares by the director of the business when he started it 7 years ago, as we have worked together in various other companies for 30 odd years. I was also company secretary. I resigned as company secretary in August of last year as I was concerned at some of the business decisions (all legal, just bad decisions) he was making and it was my way of making him see that I was very serious about my misgivings.

This morning my boss has informed me that I should relinquish my shares in order to "avoid any liability" and that he had done nothing about my resignation and that this now needed to be done "officially".

My question simply is what exactly am I liable for and in what circumstances? As far as I can make out as I own 10 shares at £1 each my maximum liability is £10 - therefore it seems daft to me to do let them go at the risk of a, upsetting the liquidator who may see it as some sort of ploy to avoid responsibilities this late in the game and b, should the company indeed get over this I will be left with nothing.

Any advice please?

sangie595

Limited liability is exactly that - limited! All the decisions may have been legal, but "bad" may also mean "negligent" - in which case liability is not limited. And in which case it would also be too late to resign. At the time those decisions were made you were still company secretary, and until you resign you will remain so. As a shareholder you would not have any liability anyway - but as company secretary you may well do; and directors definitely do.

I doubt whether it really makes any difference to anything if you dispose of the shares or not now.

WhyNot?

missingmum wrote: »

I'm not sure if this is the right place to post this, in fact I'm not even sure it is really something that can be answered on the forums at all. Anyway I'll give it a go.

Further to my post earlier this month, the company I work for are on the "bones of their backside" and it is looking increasingly likely that the company will have to enter voluntary liquidation possibly as early as next week. Several "plans" are proceeding to try and save the business, at least get us over the immediate threat, but time is quickly running out. The company is a private limited company.

I am a shareholder of this business, 10%, which equates to 10 ordinary shares at £1 each. I was given these shares by the director of the business when he started it 7 years ago, as we have worked together in various other companies for 30 odd years. I was also company secretary. I resigned as company secretary in August of last year as I was concerned at some of the business decisions (all legal, just bad decisions) he was making and it was my way of making him see that I was very serious about my misgivings.

This morning my boss has informed me that I should relinquish my shares in order to "avoid any liability" and that he had done nothing about my resignation and that this now needed to be done "officially".

My question simply is what exactly am I liable for and in what circumstances? As far as I can make out as I own 10 shares at £1 each my maximum liability is £10 - therefore it seems daft to me to do let them go at the risk of a, upsetting the liquidator who may see it as some sort of ploy to avoid responsibilities this late in the game and b, should the company indeed get over this I will be left with nothing.

Any advice please?

Assuming the shares are fully paid up (most are) then as shareholder, you will not be liable for anything.
If they are not fully paid up, you may become liable up to the £10 total.

Currently you should be receiving 10% of any company distribution (dividends)

If the company were to close, you would receive 10% of whatever is left in the company after all debts are paid.

If there is nothing left, you will get nothing.

If there is insufficient funds/assets to pay the creditors, that doesn't expose you to any further liability - the creditors will simply not get back all they are owed.

Shares cannot be "relinquished"; they can only be transferred/sold to someone else.
(Even for the company to buy them back is not simple)

You are free to agree any price between you as to what value the shares may be currently worth. But if someone wants them that badly, they need to make you an offer you can't refuse


As regards your role as Company Secretary, what exactly did you do? Normal role is to file things for the company, etc, so you could have resigned yourself quite simply ... as you presumably had access to file online. Or if you didn't have online access, you could have sent your paper form off to Companies House (assuming company had not subscribed to PROOF) .

You can view publically at Companies House whether or not your resignation was officially lodged at Companies Houses - if it was not, then you still are the Company Secretary.

annarosy

All the decisions may have been legal, but "bad" may also mean "negligent" - in which case liability is not limited.