Messy Divorce - Company Law

[looneymum]

Hi Guys. I am going through a v messy divorce (re finances). Second hearing next week and soon to be ex has just announced he may bugger off to Aus. (Leaving behind his two lovely DDs). Any road, I am sure he has done some dodgy stuff with the company. He has changed share holding from 50/50 (1 share each) to 80/20 he says for tax reasons but obviously he gets 80% of dividends and i get 20%. He has got his accountant to issue new shares without my signature. Does anyone know if this is legal? x

Yes it is probably 'legal', ie no laws have been broken.

If you have a shareholders agreement you may be able to claim against him for a breach of that agreement - you need a lawyer.

If you don't have a shareholders agreement and there is any value in the company, you really need a lawyer.

Given the Australia situation, you REALLY REALLY need a lawyer. If you already have one handling your divorce he needs to pull his finger out because once your husband and/or your money is in Australia it is going to be very difficult to do anything about it.

Thanks a lot Mr V. The Articles of Assoc lead me to believe I should have been advised of any new shares. The company has about £80k in reserve account for a "rainy day". Doesn't get any more bloody rainy that this is my opinion! Thanks again.

Good luck; I hope things work out as best as they can for you and your DDs.

No this is clearly him trying to minimise your interest in the company so he can take 80% of the value of the whole company. Get a lawyer quick and kick his arse!

I'm not 100% sure but presumably you held the same number of shares prior to the change.

To make this change either the shareholders have to hold an extraordinary general meeting and 75% of those that turn up have to vote in favour. This would be the situation if there were 100 shares and you each held 50, to dilute your shareholding generally the company would carry out a rights issue and for each share you have you would have the right to buy more. However if all shareholders were not informed of the EGM (or at least reasonable efforts made e.g. an agenda for the EGM sent to last known address) then you cannot be deemed to have been informed and therefore any issue of extra shares would not be valid.

However I am not sure what the situation would be if there were 100 shares, you had 20 each and 60 were not issued. How to go about issuing the other 60 might be covered by the articles, generally the directors have discretion to distribute shares as they see fit, but this is usually reserved for large companies to issue shares to staff as bonuses etc. Not likely that you would hold this amount back in a small company.

It's best you get proper advice, what I have said above is based on what I recall from the law paper of my accounting exams which I think I sat back in 1998.

This might be useful, I turned it up with a quick Google search.

Go and see a lawyer quick. There are company law issues and matrimonial law issues. All the above posts are supportive but you need proper legal advice based on your situation, the mem and arts of the company, your status (are you a director as well as a shareholder), any shareholder agreement, etc etc and I should get it fast.

I can't comment at all on the legal issues and am not a matrimonial lawyer but you really need to get this checked out.

Thanks everyone. Have spent a fortune on solicitors to date and it may not be worth getting a company lawyer vs what I will get in settlement - feel sick about the whole thing. Was sacked as Co Sec in December so am just a shareholder now. Have tried to get free appointment to find out if he has acted illegally but full docs need to be seen for opinion to be given. Just really wanted to have something for second hearing next Thurs so I can say he has acted unlawfully. Thanks again.

Lurkingdad. Thx for the link. I have made enquiries and for a small (ha!) sum I may get a least a document to produce in court, hopefully outlining that he has behaved unlawfully. All stuff is crossed!

I'm not a lawyer

I think there is something dodgy going on here.

Companies House has info on sale/transfer of shares. They can't do this without your signature.

"9. Can I buy shares from someone else?
Shares in a private company usually change hands by private agreement between seller and buyer. However, in all cases you must complete a transfer document. The articles of association of private companies often place restrictions on the transfer of shares that the company must observe.

The transfer of shares is normally a chargeable transaction under the Stamp Act. Stamp Duty (if appropriate) is payable to HM Revenue & Customs (HMRC) on the aggregate amount at ½% rounded up to the nearest multiple of £5.

10. How do I transfer shares to new owners? To transfer shares in a private or unlimited company, a seller must complete and sign the appropriate section of a 'stock transfer form' - available from law stationers - and pass it, together with the share certificate, to the new owner.

The new owner must then complete their section of the stock transfer form, pay an appropriate stamp duty to the Inland Revenue and pass the completed form, and share certificate, to the company. The company secretary then arranges for the directors to authorise the change to the members' register and issues a share certificate in the new name. "

Agree with others - Get a lawyer! He cannot take your shares in a business and redistribute them willy nilly. Fair enough he could dilute them. But then instead of owning one share, you would say own 50 of them. Each share might be of a lower value, but they would still be yours.

I worked for a pharma co and owned shares. When they made a big viagra discovery the shares were subject to a 1-3 split. The value of the shares went up at that time.
, but obviously allowed them to put more on the market. My shares were still mine though.

I mean to say, for every one share I had, I then owned 3.