Business

[Jessica2112]

My husband and I are entering into a business partnership. Shares would be allotted as follows:

US - 40%
couple 2 - 40%
couple 3 - 20%

If my husband and I were to have 20% each instead of just the 40% on one of us does this put is in a weaker position to the other owners? Couple 2 are holding their shares on just one of them. We have never before had any dealings with business shares and I want to know the best way for us to handle the shares.

It makes no difference in terms of your position in the business. As long as you vote together, you still have 40% of the business. Of course, it opens up the possibility that you might vote one way and your husband the other. And, regardless of how you own the shares, the other shareholders can outvote you.

Thank you for a prompt response. So in terms of minority and majority we would not be in a weaker position? Unless as you have said the other were to outvote us? I am really concerned as I know nothing about shares and I had also read somewhere that less than 25% is a minority shareholding - would this then mean that the others have more rights than we do?

Isn't this why traditionally there is 51% held of the controlling shares?

Anything below 50% is a minority shareholding.

There are certain actions that require a 75% majority (changing the Articles of Association, for example), so a single shareholder with 20% can't block that but two shareholders with 20% each can. However, most decisions only require a simple majority, so the other shareholders can outvote you and your husband regardless of how the shares are held.

No, the other shareholders would not have more rights than you.