Advice needed, small shareholder, business being sold 16 June at 10:02AM in Small Biz & Charities' MoneySaving 5 replies 120 views

KevinPG

Good morning,

Asking for advice on behalf of my sister, who is a small shareholder in the company she works for.  Role is General Manager and was given 1% back in 2015.

The company is being sold for £1.1 million (plus he sum of whatever cash is in the bank)

Question being are the obliged to buy her shares too,?
She has 1% of the company? 3334 out of 333,334 shares
There are a, b, c, d, e, f shares amongst different directors (all the same family that she has worked for, for over a decade)

And what obligations are the buying company and current company due to her, letters, documentation etc?

Besides here as well, where would be best to go for advice - and future employment advice (current owner trying to say that her salary should go down (£10k deduction) and rest be dividends for her benefit.  Previous self assessments she has put through no deductions and only recently asked me for help.

Many thanks, happy to provide any/all/more information

Sandtree

They are not obliged to buy her shares and the fact they talk of future dividends means they arent. 

The problem is that too many people talk of "buying the company" but the term covers many different possible scenarios and some are not actually buying the company at all. If someone one or another entity is just buying some of the shares and keeping the business as a going concern then she is still the employee of the same company and her employment rights are unaffected. If they'll be moving employees to another part of the now larger organisation then TUPE rules are likely to apply.

She needs to understand the plans better first and then speak to a solicitor... she also needs to decide what outcome she wants too ideally.

KevinPG

Its a small residential care home.  The other 99% of shares are being sold to the new buyer.
Long term she doesn't know how it is going to work out.  They have said it will continue to run as a care home but the buyer is a property redeveloper so has concerns.  

Dividends are only instead of her current salary so effectively moving £10k of PAYE to £10k of dividends payments per year (this is current owner , she hasn't been able to speak to new one yet)

She would like her shares bought out too, as had always been agreement with owner, and reason she had agreed to stay until he sold up (and why was given her shares) - £11k on £1.1million would be small difference for the purchaser i'd assume

I've advised her to seek advice (as you mention) but said i will ask too, thank you for your reply  

Pennywise

Different classes of shares have different rights, i.e. voting, dividends, capital, etc.  She needs to check what rights are attributed to the class of shares she holds.  She can view the company's Articles & Memorandum of Association and subsequent resolutions etc by doing a company search on Companies House, and then she'll see what rights are attached to her shares.  It could well be dividend only, in which case she'd have no rights to vote and not entitled to the same price per share as the other shareholders are getting.

MattMattMattUK

KevinPG said:

Dividends are only instead of her current salary so effectively moving £10k of PAYE to £10k of dividends payments per year (this is current owner , she hasn't been able to speak to new one yet)

Salary is guaranteed, dividend depends on profits, in the situation as described she would stick with profits as I suspect that they will somehow manage to not have any profits to distribute dividend from.

KevinPG said:

She would like her shares bought out too, as had always been agreement with owner, and reason she had agreed to stay until he sold up (and why was given her shares) - £11k on £1.1million would be small difference for the purchaser i'd assume

The purchaser is under no obligation to buy them, but if she has a good relationship with the existing owner and the transaction has not gone through yet, she could ask him to buy them back before the sale is completed.

KevinPG

Thank you for the replies