Shareholder in a limited company Advice needed

Janeyallrim

Hi, i need some advice, i have shares in my ex husbands business ( we dont speak as it ended badly) he has never paid out on my shares but paid out on the rest of the other shares they are a-d shares ( i hold 5.87% B shares) is this illegal to do this? Also i want to sell them do i have to sell them back to the company or can i sell them to someone else?

eskbanker

If you're referring to dividends then yes, these must be paid equally on a standard per share basis within each class.  It's perhaps plausible that this could be an admin issue (e.g. inaccurate address or bank info on share register maybe?) rather than deliberate omission - would it be viable to discuss the matter with the company secretary?

You can sell the shares to anyone who wishes to buy them, unless there are any specific provisions overriding that principle - does the fact that you know others have received dividends signify that you have a willing buyer in mind?

Prism

Is it possible you are the only one with class B shares and the others have a different class? That could explain why you don't get dividends.

dunstonh

he has never paid out on my shares but paid out on the rest of the other shares they are a-d shares ( i hold 5.87% B shares) is this illegal to do this? 

Depends on the terms of the share classes.

What are those terms?

steampowered

You can download a copy of the company's articles of association here: https://beta.companieshouse.gov.uk/

The B Shares might have been entitled to dividends, or they might not. It depends on what the articles say.

It is possible either for shares to be bought by the company or by a third party, but again you'd have to read the articles to see whether they allow this. There are also legal restrictions around when a company can or cannot buy back its shares.

Thrugelmir

What was agreed when you divorced, i.e. in the financial consent order?  

dd95

it could well be that those B shares have no entitlement to dividends, that they are entitled to dividends after  a certain amount is paid to A holders (and thus nothing left) or as above could even be an admin error.

you can sell them to anyone. Just check that there are no pre emption rights in the articles/SH agreement on a transfer of shares. These aren't implied by law but take effect if in the articles or SH agreement - they effectively mean that the sale shares must be first offered to existing shareholders as a % of the shares they own, so e.g. if the other shareholder owns 50% of the shares then 50% of the sale shares must first be offered  to the shareholder.

Janeyallrim

I was paid out of them when I was married, the judgement in the divorce never said anything about not paying out on them, although the judge gave him a right going over and called him mean spirited for not paying out on them to me,All the other shares have been paid out on, the person who has the same amount of shares but a different class has been paid out on! They also said they weren’t getting any dividends this year and they did!!

DoctorStrange

I suspect your ex-husband owns the A shares,  and that these carry all the voting rights.  As such,  his accountant has probably told him to change the payout structure so that your B shares don't receive anything anymore, but the A, C and D shares do. He maybe also have issued thousands of new shares to himself,  to dilute your holding to a meaningless level. 

I'm not sure what you can do really, but I think to start with you could ask for a copy of the shareholder registers, current share classes/structure, dividends declared and paid etc.  In not sure how much info you're legally entitled to but it might help start some conversations?

Best of luck with it all

dd95

Janeyallrim said:

I was paid out of them when I was married, the judgement in the divorce never said anything about not paying out on them, although the judge gave him a right going over and called him mean spirited for not paying out on them to me,All the other shares have been paid out on, the person who has the same amount of shares but a different class has been paid out on! They also said they weren’t getting any dividends this year and they did!!

it doesn't matter if they have the same amount of shares, what matters is the class. I.e a person with 10 class A may be entitled to dividends whereas someone with 10 Class b may not

dd95

DoctorStrange said:

I suspect your ex-husband owns the A shares,  and that these carry all the voting rights.  As such,  his accountant has probably told him to change the payout structure so that your B shares don't receive anything anymore, but the A, C and D shares do. He maybe also have issued thousands of new shares to himself,  to dilute your holding to a meaningless level. 

I'm not sure what you can do really, but I think to start with you could ask for a copy of the shareholder registers, current share classes/structure, dividends declared and paid etc.  In not sure how much info you're legally entitled to but it might help start some conversations?

Best of luck with it all

yep, sounds as if he's dis-applied the statutory pre emption rights too if he's issued further shares - if done properly you would have been entitled to the same as your shareholding first