Dilution of Shares and Shareholder Agreements

[prozak]

I've been thinking about some of the threads on here regarding marriage issues.

My current structure of shareholding is 80/20 with my wife.

If it all goes tits up what are the options with regards to diluting her shareholding?

Can it be done or will she be able to fight it?

Also, is it possible to have a shareholders agreement that allows the company to dilute shares without offering a rights issue or something?

[russell]

I've been thinking about some of the threads on here regarding marriage issues.

My current structure of shareholding is 80/20 with my wife.

If it all goes tits up what are the options with regards to diluting her shareholding?

Can it be done or will she be able to fight it?

Also, is it possible to have a shareholders agreement that allows the company to dilute shares without offering a rights issue or something?

Just close the company and start a new one.

[northernladuk]

As a share holder she has voting rights on anything you decide to do with the shares doesn't she? The question you need to ask is how likely is it that she will vote for something that isn't in her interests if it all goes wrong?

[Clare@InTouch]

There's a good website here that shows various rights for various levels of shareholdings - Shareholder Rights - Legal Advice for Private Limited Companies

It's not a substitute for getting legal advice, and a proper shareholders agreement if necessary, but gives some good background.

[prozak]

Just close the company and start a new one.

Yes. That is possible. But that is not what I am asking.

[BrilloPad]

Just close the company and start a new one.

WRS

+ If there is any chance of things going wrong, company issues are the least of your worries.

[prozak]

As a share holder she has voting rights on anything you decide to do with the shares doesn't she? The question you need to ask is how likely is it that she will vote for something that isn't in her interests if it all goes wrong?

Hmm. Yes but she only has a 20% share, so cannot do much.

[prozak]

There's a good website here that shows various rights for various levels of shareholdings - Shareholder Rights - Legal Advice for Private Limited Companies

It's not a substitute for getting legal advice, and a proper shareholders agreement if necessary, but gives some good background.

Interesting read. But can't find the exact answer....

Oh well. Just a hypothetical question anyway.

[ASB]

I've been thinking about some of the threads on here regarding marriage issues.

My current structure of shareholding is 80/20 with my wife.

If it all goes tits up what are the options with regards to diluting her shareholding?

Can it be done or will she be able to fight it?

Also, is it possible to have a shareholders agreement that allows the company to dilute shares without offering a rights issue or something?

You might be able to implement a "poison pill" of some description. Though you would need current agreement of the shareholders and "well darling would you just agree to this so I can dilute you to fsk in the event we divorce" might not elicit the answer you are looking for.

In any event I would expect it is likely to be irrelevant should divorce occur.

Personally I would expect the value of the company to be considered matrimonial assets and splitting as part of the settlement irrespective of who might own what proportion of the shares. Of course how this pans out would depend upon whether agreement can be reached without too much acrimony. In any event if the parties agree themselves before agreeing to the consent order if they have been unrepresented the judge would normally cast an eye over the potential agreement and call both parties into court if he felt they were not looking after their interests reasonably.

Some pages for thought.

Is she entitled to Part of my Limited Company - General - Divorce | Solicitor Divorce only £179
Divorce and the Family Business
Rising value of shares cannot affect divorce settlement, judge rules | UK news | guardian.co.uk
Divorce: divorce settlements: financial agreements