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Original poster

Can a company force me to give power of attorney to sell my shares?

29 replies

MummytoBe1111 · 02/12/2024 12:36

A company that I own minority shares in is getting sold, I got an email from the company asking me to sign documents to give the CEO power of attorney. I did not sign. They email me a drag notice stating that if I did not sign the documents I will be considered to have agreed to give them power of attorney and I will not receive any payment unless I give my financial information to another business that they are using to process payment. The company refuses to give share price or any information on how much I would receive.

My question is, can they actually force me to give them power of attorney, even if I explicitly refuse? and can they keep the money from the sale if I do not agree to their payment method?

I appreciate all advice

OP posts:
PotteringAlonggotkickedoutandhadtoreregister · 02/12/2024 12:37

You need to get actual legal advice asap

graceinspace999 · 02/12/2024 12:38

No idea but maybe a visit to a solicitor might help? Or citizen advice.
Good luck.

anniegun · 02/12/2024 12:40

It depends on the investment agreement you signed when you acquired the shares. Read that first and it should help. It is quite normal for shares given to staff to come with clauses that determine how a sale will work (and generally give you very little control)

anniegun · 02/12/2024 12:42

If there was a drag clause in the original agreement that generally means you have to sell and legal action can be taken if you do not co-operate

paranoidmumdroid1 · 02/12/2024 12:45

Yes not unsual to have "drag along" rights in the articles of association of a company too.
Are you in the UK? You can see constitutional documents for a company online at Companies House.

custardpyjamas · 02/12/2024 12:52

If the company is getting sold and you don't have a majority share holding I don't think you have much choice but to sell with everyone else if that is the deal and if you want the money someone will need details of how to pay you. What sort of shares do you have? Why are they selling? And how big is the company? As others have said get legal advice if you want to try to challenge this, but unless you have a lot of shares or they are very valuable it will probably cost more than you will get back. I assume the company isn't listed so there is no share price available and you cannot sell on the open market.

HermioneWeasley · 02/12/2024 12:55

Sounds like a standard drag alone clause which yes will compel you to sell for exactly this reason that they don’t want lots of minority shareholders being difficult.

you can of course take legal advice but I’d be surprised if there’s any wiggle room for you

EvelynBeatrice · 02/12/2024 12:55

Look at the company’s articles of association which are available free online at Companies House. Google that and then search for the company and look at its filing history. Start at the presnet day and work backwards until you find the most recent articles of association.

This type of ‘drag’ provision is commonplace where a majority of the shareholders want to sell. the articles will tell you whether you are entitled to the same price as everyone else.
Legal advice is a good idea. Don’t ask your family type lawyer - you need a firm that do some corporate law.

MissMoneyFairy · 02/12/2024 13:15

What do they need poa for, can't you just sell your shares

ElaborateCushion · 02/12/2024 13:50

anniegun · 02/12/2024 12:40

It depends on the investment agreement you signed when you acquired the shares. Read that first and it should help. It is quite normal for shares given to staff to come with clauses that determine how a sale will work (and generally give you very little control)

This. That said, I'm not sure why you'd have to give official power of attorney - you should still be able to be able to sign your own agreements, etc.

If there is nothing in the agreement/Articles of Association I would send them an interim email in the meantime, confirming in no uncertain terms that until you have obtained your own legal advice you absolutely do not agree to giving them power of attorney.

Original poster
MummytoBe1111 · 02/12/2024 13:53

They said that they need POA to make the sale "go smoothly", I've sent them an email saying that I do not agree to give power of attorney and that I did not object to the sale of my shares I just need to know how much I will get. The responded by saying that they will not provide the price and if I want to get paid I will have to provide a third party company with my financial information. They have ignored everything else.

OP posts:
Original poster
MummytoBe1111 · 02/12/2024 13:54

Thank you all for your responses. Does anyone have a recommendation for a solicitor?

OP posts:
MissMoneyFairy · 02/12/2024 13:58

Poa is to give someone you trust the power to deal with your finances when you no longer wish to, I'd be reporting them to the opg. Why can't the cash from the shares be paid directly to you or your bank.

Original poster
MummytoBe1111 · 02/12/2024 14:04

I don't know, they are not answering my questions. I have contacted a couple of solicitors but they have asked for extremely high fees that I cannot afford, I'm sorry if I'm asking stupid questions but how do I report them the the OPG?

OP posts:
MissMoneyFairy · 02/12/2024 14:38

You can alert the opg on their website. Can the accountant or whoever is dealing with the sale not just sell them and send you a cheque, I'd say I don't have Internet banking. The share price should show up on the companies accounts page or the stock exchange if it's listed there. Not an expert but it all seems rather complicated. Are they just asking where the payment needs to be paid after the company and shares are sold.

Original poster
MummytoBe1111 · 02/12/2024 15:05

No they have appointed a third party payment processor to pay, they said that I have to register with them or I won't get paid.

Thank you, I'll look into the opg website and see what can be done. I guess my main concern is that they might try to get out of paying somehow, they have a history of deception so I won't put it beyond them to try something like that.

If you know what type of solicitors are best to contact and get advice on this matter I would really appreciate it.

OP posts:
EvelynBeatrice · 02/12/2024 15:18

A complaint to the OPG isnt appropriate here. It’s not a ‘lasting’ power of attorney. It’s not the same as the type of attorney that you give to a trusted relative or solicitor for the time in the future that you lack capacity due to age or disability; this is a different type of document that confers authority on another party to sign a document for you and sometimes to negotiate on your behalf - depends on its terms. Completely standard to allow directors to act for multiple selling shareholders when company is being sold. Obviously don’t grant it if you don’t want to. But it sounds from what they say that the articles can ‘deem’ you to have granted a power of attorney when the circumstances in that article have been triggered.

This doesn’t sound unusual. Most commercial buyers want to buy the whole company and not just part of it - that’s what these ‘drag’ clauses are for. They’re all different - if I were you I’d read the articles for the company - but they often say where the majority of the share holders want to sell to an independent third party, they can effectively force the minority to sell too, usually on the basis that everyone gets the same price per share sold. So the directors/ the company’s lawyers probably want you to sign the attorney and give your bank details so they can get the buyer to pay you for your shares along with the other sellers at some point.

Don’t assume they are out to cheat you - I came across a similar situation previously and the above is what I was told. But hopefully they’ll come back with some info soon. In the meantime time look at the company on Companies House - it’s not hard. It will tell you as a matter of public record who the directors are and you’ll be able to find the articles of association.

SuzieNine · 02/12/2024 15:22

Surprised they are even doing that and not just using the standard drag along clause. It’s a real pain, especially if it forces you into a CGT situation you weren’t expecting.

MissMoneyFairy · 02/12/2024 15:23

What's the type of poa they are asking for called, s financial poa doesn't have to be when you've lost capacity.

Dandylione · 02/12/2024 15:25

poa is totally standard in deals with lots of minority shareholders being dragged along. Otherwise the completion of the deal is an administrative nightmare. If you are happy to sell the shares I wouldn't waste money getting advice on this.

Waspie · 02/12/2024 15:25

Surely it's just the same sort of power you give your conveyancing solicitor when you buy a house so that they can do the exchange and completion for you? It's not a lasting power of attorney, it's a short term, specific one.

Original poster
MummytoBe1111 · 02/12/2024 15:32

So if I just do nothing and let them carry on with the "drag", would I lose my payment?

OP posts:
Original poster
MummytoBe1111 · 02/12/2024 15:33

Thank you all so much in case I forgot to thank anyone, you've all been helpful

OP posts:
Musicaltheatremum · 02/12/2024 15:35

Yes , I gave my solicitor poa when he was buying my flat as I was in Edinburgh and he was in London.

ElaborateCushion · 02/12/2024 15:37

You need a solicitor that deals with commercial transactions.

If you're around London/Home Counties, take a look at Harold Benjamin, Blaser Mills or EDC Lord. Some firms will give you 30 mins of advice for free, which might be sufficient for you to know whether it's fair and reasonable for them to expect you to use this third party payment company.