Employee owning shares wanting to leave company

gabb1226

Good afternoon,
I took a job 3 years ago and woked hard from day one, as an incentive my boss gave me a 10% share in the business to keep me motivated. 2 years on and the working relationship seem to have broken down now to the point where I want to leave the company. Where do I stand now with regards to selling my shares back to him and any dividends that I'm owed? I had doubled the turnover of the business and created a heathy amount of profit over the last 2 years which gave my boss dividends that were 200% more than when I started. All I'm looking for is what I'm entitled to and how do I best go about leaving the company? any advice would be greatly received
Many Thanks

k3lvc

The starting point is what does your contract say ? You do have one ?


Outside of that the options would be
a) you sell your shares to a 3rd party (but presumably your 'partner' would have to agree this)
b) you sell to 'partner' - who agrees the price
c) you walk away and chalk it up to experience

silvercar

Minority shareholders have some rights.

Whenever dividends were declared you should have received the same dividend per share as other shareholders.

You could retain your shares and still collect dividends.

gabb1226

My 10% shares have to same rights as the other 90% according to the information kept with companies house.

I do not have a contract of employment as such but on my share certificates it states that they are subject to the articles of association which are lodged with companies house, the problem is I'm struggling to understand this document as its written in legal jargon

Many Thanks

General_Grant

gabb1226 wrote: »

My 10% shares have to same rights as the other 90% according to the information kept with companies house.

I do not have a contract of employment as such but on my share certificates it states that they are subject to the articles of association which are lodged with companies house, the problem is I'm struggling to understand this document as its written in legal jargon

Many Thanks

Has a dividend been declared during the time since you were allocated the shares? Was this paid to you?

gabb1226

Yes I had a dividend for 15/16 tax year, I have not had any for the 16/17 tax year as of yet

TBagpuss

You need to read the artiles of association and any shareholders' agreement.

You can give you notice and leave the job just as you can with any other employment. Your notice period will be as set out in your contract of employment or, if it is not stated there, the statutory 1 weeks per year worked.

In terms of the shareholding, it is not uncommon in private limited companies, for there to be rules about ownership of shares. This may mean that you can be required to sell your shares back to the other shareholders (in which case they will need to be valued) or that your voting rights change. As silvercar says,minority shareholders do have rights - normally these will protect you when it comes to getting dividends.

If you are not clear about the meaning of the articles of association then speak to a solicitor or accountant with experience of private limited companies, and get them to talk you through it.

Also think about what you want. Even if the shareholders agreement / articles don't require you to sell back the shares to the company, do you want to keep them or cash them in? Having a clear idea about what you want to achieve is a good idea, and would allow you to ask the right questions when you do meet an expert to review the agreement.

getmore4less

TBagpuss wrote: »

You can give you notice and leave the job just as you can with any other employment. Your notice period will be as set out in your contract of employment or, if it is not stated there, the statutory 1 weeks per year worked.

Statutory employee notice is 1 week NOT 1 week per year..

getmore4less

gabb1226 wrote: »

Yes I had a dividend for 15/16 tax year, I have not had any for the 16/17 tax year as of yet

there should be a date the shares go ex dividend and they no longer qualify when was 15/16 declared?

The "owner" can consider not paying a dividend.

The issue may well be you can only sell to insiders and if you are critical to the business growing they have less value with you gone.

Are you sure this is not reconcilable.

steampowered

When employees are granted shares in the company, they typically forfeit some or all of those shares when they leave the business.

This is usually achieved in the company's articles of association. You need to read that document carefully for references to "Bad Leaver" and "Good Leaver" provisions.

However - if your boss did not take proper legal advice and just used a "standard" articles of association - then you would just remain a 10% owner of the company unless you and your boss agree otherwise.

If you are able to post the company name, I'm happy to look at the articles of association and point you towards the relevant clause.