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company law question

ju5t1nju5t1n Posts: 2,028
edited March 2012 in The bottom bracket
Not cycling related in the least, but I have quick question about company law and you're a clever bunch in Cake Stop :D

I'm a minority shareholder in a company that was formed autumn 2012. The majority shareholders (80% of the shares) are requesting that everyone sign a shareholders agreement, a clause in which would remove my pre-emptive rights to new share issues.

Can I be forced to sign the agreement?

Thanks

Posts

  • jordan_217jordan_217 Posts: 2,580
    Can I buy some shares? Any company that can start itself in the future is going to be worth lots of cash!
    “Training is like fighting with a gorilla. You don’t stop when you’re tired. You stop when the gorilla is tired.”
  • ju5t1n wrote:
    Not cycling related in the least, but I have quick question about company law and you're a clever bunch in Cake Stop :D

    I'm a minority shareholder in a company that was formed autumn 2012. The majority shareholders (80% of the shares) are requesting that everyone sign a shareholders agreement, a clause in which would remove my pre-emptive rights to new share issues.

    Can I be forced to sign the agreement?

    Thanks

    No. Simples.
    Swim. Bike. Run. Yeah. That's what I used to do.

    Bike 1
    Bike 2-A
  • ju5t1nju5t1n Posts: 2,028
    jordan_217 wrote:
    Can I buy some shares? Any company that can start itself in the future is going to be worth lots of cash!
    Sorry, 2011
  • GizmodoGizmodo Posts: 1,928
  • no. but if your not signing up is effectively a veto on what the other 80% want to achieve, expect an amended request sometime soon whereby the motion will be carried on, say, 80% majority agreement ... What are the stakes here? If they're high, you need to invest in some independent advice and go see a lawyer.
  • ju5t1nju5t1n Posts: 2,028
    Their only objective is to dilute my shareholding by issuing new shares to themselves
  • no. but if your not signing up is effectively a veto on what the other 80% want to achieve, expect an amended request sometime soon whereby the motion will be carried on, say, 80% majority agreement ... What are the stakes here? If they're high, you need to invest in some independent advice and go see a lawyer.

    What motion? You can't bind someone to an agreement if they are not willing to consent to it.

    The 80% could amend the articles of the company to disqualify the OP from participating in a rights issue by passing a special resolution. However that would walk them into an unfair prejudice petition, and any rights issue they attempt could very likely be restrained by an injunction. Not smart.
    Swim. Bike. Run. Yeah. That's what I used to do.

    Bike 1
    Bike 2-A
  • Wirral_paulWirral_paul Posts: 2,476
    Greg66 wrote:
    no. but if your not signing up is effectively a veto on what the other 80% want to achieve, expect an amended request sometime soon whereby the motion will be carried on, say, 80% majority agreement ... What are the stakes here? If they're high, you need to invest in some independent advice and go see a lawyer.

    What motion? You can't bind someone to an agreement if they are not willing to consent to it.

    The 80% could amend the articles of the company to disqualify the OP from participating in a rights issue by passing a special resolution. However that would walk them into an unfair prejudice petition, and any rights issue they attempt could very likely be restrained by an injunction. Not smart.

    Further to this - have a good look into "Right to First Offer" - this is supposed to ensure that they cant force dilution upon a minority shareholder as there is a requirement in company law to offer you first offer on 20% of the new shares. Each shareholder is limited to their existing percentage stake upon first offer. As stated, to do as they are suggesting could be restrained if needs be
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