Given shares and asked to be MD of a Ltd company

Marcon

mezzor said:

I'll try and be as straightforward as possible but I just have no idea where to start...
I am an employee of a Ltd company
Ltd company is made up of 2 owners, one (Husband, not in a good head space/erratic) owns 750 ordinary A shares with full voting powers, the other (Wife) owns 250 Ordinary B shares with no voting rights.
Just decided they are getting divorced.
Owner calls crisis meeting with me, says he needs to get shares out of his name ASAP. Tells me he is signing a TR1 form transferring all his shares into my name. 
He does this and gets a solicitor to witness him signing the form. He does the same for his other 3 businesses to other employees of those businesses.
He then says, he is just going to keep the documents should he ever need them which I think means he won't submit them to Companies House until necessary. 

Finally he says that in the not too distant future, he wants to make me the MD of the company and that I will run this for him. 

Unfortunately I'm not on a great wage and cannot afford independent legal advice but I was hoping someone can tell me a few things... Does the form have to be submitted to have any legal baring, or do I effectively own his shares now? What does this mean because nothing has been discussed with me at all? If he makes me the MD of the company on top of this, is he effectively giving me the company? Not a lot is making sense right now.

You said you've just had a decent pay rise, so spend some of that on an essential (and an urgent one): qualified legal advice. You have no idea how much trouble you could be getting into if you go along with this nonsense.

tripled

DullGreyGuy said:

tripled said:

To transfer the shares it would need to be properly recorded, that's company meeting minutes approving the transfer, you being given the share certificates, and the transfer form being given to companies house.

The company doesn't need to approve the transfer of shares from one person to another, would be a major issue if a company had to approve each sales/transfer of each share.

They will have to register it with companies house within 14 days as already stated.

It's a Ltd Co not a PLC. Ltd Co shares are not traded. There will usually be restrictions on transfers in the articles.

DullGreyGuy

tripled said:

DullGreyGuy said:

tripled said:

To transfer the shares it would need to be properly recorded, that's company meeting minutes approving the transfer, you being given the share certificates, and the transfer form being given to companies house.

The company doesn't need to approve the transfer of shares from one person to another, would be a major issue if a company had to approve each sales/transfer of each share.

They will have to register it with companies house within 14 days as already stated.

It's a Ltd Co not a PLC. Ltd Co shares are not traded. There will usually be restrictions on transfers in the articles.

But the model terms for a private company limited by shares is that the directors can refuse to register the transfer rather than them having to approve it. Whilst at the 1,000 foot view that may sound the same as the company having to approve the transfer its technically not and doesnt require them to have company meeting minutes etc. 

Obviously not everyone uses model terms but its the base starting position for most.

tripled

Fair enough, DullGreyGuy said:

tripled said:

DullGreyGuy said:

tripled said:

To transfer the shares it would need to be properly recorded, that's company meeting minutes approving the transfer, you being given the share certificates, and the transfer form being given to companies house.

The company doesn't need to approve the transfer of shares from one person to another, would be a major issue if a company had to approve each sales/transfer of each share.

They will have to register it with companies house within 14 days as already stated.

It's a Ltd Co not a PLC. Ltd Co shares are not traded. There will usually be restrictions on transfers in the articles.

But the model terms for a private company limited by shares is that the directors can refuse to register the transfer rather than them having to approve it. Whilst at the 1,000 foot view that may sound the same as the company having to approve the transfer its technically not and doesnt require them to have company meeting minutes etc. 

Obviously not everyone uses model terms but its the base starting position for most.

Fair enough. That approval should still be recorded somehow though, as they have no rights without approval. Given it would be a total change of control of the company, not just a minority stake, and seems to be a bit of a scam by the current MD, I would argue that would be prudent for it to have company meeting minutes even if not mandated by the articles. Of course, the MD won't want that, as that would require notifying the other shareholder, ie his soon-to-be ex-wife.

Exodi

I'm guessing the OP's first post has changed as I can't see anything about this 'divorce scheme'.

Gutted, this is quite the entertaining read! I can't see how this could possibly work in reality though.

Imagine turning up at divorce court:

ex-md: "i have no assets, as I gifted them all to randomers yesterday"
judge: "damn this guy is good. OK then the ex-wife gets nothing, case closed."

Plus it sounds like a double whammy for the ex-MD when he inevitably gets stung for his little divorce plot as he approaches the OP for his company back:

ex-md: "can i have my company back"
OP: "no"
ex-md: "damn this guy is good."

Marcon

Exodi said:

I'm guessing the OP's first post has changed as I can't see anything about this 'divorce scheme'.

Gutted, this is quite the entertaining read! I can't see how this could possibly work in reality though.

Imagine turning up at divorce court:

ex-md: "i have no assets, as I gifted them all to randomers yesterday"
judge: "damn this guy is good. OK then the ex-wife gets nothing, case closed."

Plus it sounds like a double whammy for the ex-MD when he inevitably gets stung for his little divorce plot as he approaches the OP for his company back:

ex-md: "can i have my company back"
OP: "no"
ex-md: "damn this guy is good."

See my post of yesterday at 11.32 pm - I've quoted OP's original post in full.

General_Grant

tripled said:

DullGreyGuy said:

tripled said:

To transfer the shares it would need to be properly recorded, that's company meeting minutes approving the transfer, you being given the share certificates, and the transfer form being given to companies house.

The company doesn't need to approve the transfer of shares from one person to another, would be a major issue if a company had to approve each sales/transfer of each share.

They will have to register it with companies house within 14 days as already stated.

It's a Ltd Co not a PLC. Ltd Co shares are not traded. There will usually be restrictions on transfers in the articles.

It's a bit off topic but I expect that the majority of PLC shares are not traded, that is not using stock exchange.