Share transfer dilemma
June 4, 2015 at 2:20 pm #2049
I have a bit of a dilemma and I hope you can solve this.
I started a company a couple of years ago and it couldn’t get off the ground. My naivety and lack of help in the right areas were the main cause.
However, I got investors to the tune of 50%, I held 40% and the company had 10% floating. This began 6 months ago
Solicitor, Accountant and shareholder’s agreement in place.
The investors helped in areas I lacked experience in and, on the whole, it was starting to look very promising ….. until a bombshell.
Because a couple of shareholders believed they were putting in ‘extra’ effort (with no results) I was forced to relinquish half of my 40% share equity to them or the company would fold.
Believing this would be a ‘fair’ way to go forward, I relented and 3 weeks ago signed the forms for transfer.
The company has a balance of 36000 and so the share value of my 20% sale equates to 7200 to come from them.
Now comes the dilemma
Since the signing of the forms, there has been no payment 3 weeks later.
From what I have read, once the share transfer form is signed the payment should be immediate? Is this because share prices may fluctuate?
Now here is dilemma 2.
After an email to the shareholders, effectively stating I want a resolve as soon as possible, one shareholder rang me to state they are waiting to get an answer on a ‘yes’ from a potential customer before they turn over the payment for the share allocation.
This would give us profit of £5000 per month. We have 3 of these customers in the fire.
Now my questions:
1. Should payment be same day for the share transfer? Legalities? Exceptions? What is the timeframe from signing a share release form to payment?
2. If the shareholders, despite ‘forcing’ me to sell 20% of my shares, hold off until a customer says ‘yes’, would the ‘yes’ instantly bump the share value (profit of £5000 per month, per customer)? If so, where do I stand on this? Do I have to sell for the signed market value, or the current market value.
3. Do I postpone the share sale until we DO get a yes from a customer. That is what my shareholders are effectively waiting for.
4. Am I being naive and used by the shareholders so they can get cheap shares for a little bit of work (and no results I may add)?
5 Do I force them to pay for the shares instantly, before any potential customers say yes?
Complicated, I know, but I feel as if I have been forced into a corner and now being used for my naivety
ThanksJune 8, 2015 at 5:11 pm #2063
I’m not sure quite what you mean by ‘10% floating’ – I presume that means 10% of the issued share capital is subject to an option pool.
Anyway, you say the company has a “balance of 36,000”, but don’t expressly state that that was also the valuation you agreed on with the others which informed the consideration figures inserted in the stock transfer forms.
If no payment has been made arguably there has been no completion and no contract has been formed because of the absence of consideration, unless you agreed for the payment to be left outstanding as a loan owed to you.
A private company’s shares are only ever worth what someone is prepared to pay for them at any given time. There’s no public market which informs a private company’s share price. In any case, the shares are your property, nobody can force you to sell them unless you agree a price at which to sell them at.
Any transaction like this should only ever be entered into after taking legal and accounting advice and having suitable professionals ensure it completes cleanly on clear terms.
Feel free to drop me an email (see home page) if you’d like to fix a time to discuss this further and get more focused advice.
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