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Franklin
Franklin, Attorney
Category: Business Law
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Experience:  Clients consistently recommend my excellent service.
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Morning, I was given 5% shareholding on the company I used

Customer Question

Morning,

I was given 5% shareholding on the company I used to work for after I lent the company some money to help out with a licence they needed.

I was however terminated from that company, and my boss is a little slack with the finer details of contracts and therefore he gifted them to me without a shareholders agreement. In my own personal contract (i worked as a consultant) again nothing regarding this is mentioned. So I saw both directors sign the shareholders agreement and the shares were in my name but they are yet to be allocated - what does that mean? This is the email I recieved from my boss:

EMAIL 1:


With regard to the 5% of the stock holding of Mercury that we discussed gifting to you personally for:

· Your contribution to the company to date.


· To incentivise your on-going, honest contribution to the company and its growth.


The 5% of the shares have not yet been transferred to you, though, they have been issued at Companies House. You are not yet the legal owner of the shares. Considering that you have now left the company following an irretrievable breakdown of trust (which would normally be covered by a ‘bad leaver’ clause in any standard shareholder’s agreement) and the fact that we verbally discussed the shares transferring back to me should you leave the company within a year of us discussing them being issued to you; I would like to exercise that right.

If you choose to claim the shares and sell them back at par you will incur capital gains tax on the shares. Furthermore, following the collapse of talks with any potential investors, it is a moot point as to what the shares are worth. Since you paid nothing for them, I’d suggest that we simply agree a price which Mercury FX pays to you in return for your legal waiver of any rights or claim to the shares at all.

END OF EMAIL.

I then stated I will be claiming them. He then said this in another email as a closing point:

EMAIL 2:

I suggest that once we have agreed this figure we calculate a figure to compensate you for wavering any right to the shares, which were never allocated to you.

END OF EMAIL.

What does the allocation mean? And do I own the shares???

How is the best way to proceed?

Amir
Submitted: 2 years ago.
Category: Business Law
Expert:  Franklin replied 2 years ago.
Hello, my name is Franklin, an U.S. immigration and business attorney, and I'll be happy to assist you today.

Yes, you currently own the shares. Oral contracts are just as good as written contracts, especially in your particular circumstances here, where your boss confirms ownership of your shares via email.

Allocation simply means that 5% was allocated to be transferred to you, but has not yet been transferred. It seems to me that your old boss made a gift of the shares to you, then regretted it when you left the company. Now, he's trying to backpedal with fancy language. However, you are still the rightful owner of those shares, and can enforce your interest in a court of law, especially given your boss's email confirmation.

However, that being said, "ownership" in this example doesn't seem like it means much. I'm guessing that this is a small or privately held company, such larger companies would make sure to execute the proper paperwork in transferring shares. Since this is a small company, there is very likely not a large market for your shares, if there is a market at all. In other words, you are not likely to find anyone willing to buy them from you for a fair price besides the current people at your company.

Settling with your company for a fair price for your shares may be your the best option at this time if you'd like some immediate monies. If you'd like to hold on to your shares, and see where it leads in the future, you're certainly free to do so as well, but you may not be able to sell them in the future, especially if your old company begins to do poorly. This is a personal choice that's up to you.

In the meantime, you should continue to stand firm to your old boss, and reconfirm ownership of those shares. If necessary, consult with a local attorney as well regarding this issue, as most attorneys will offer free consultations. If you can find one that's willing to draft a letter on your behalf to the company, that would be very beneficial to you as well.

I hope my answer was helpful to you today. Please take a moment to rate my service, not the outcome. If you need more info, let's continue this conversation. I spend a lot of time crafting a good answer for you, and depend on positive ratings to continue, so thank you in advance for your support.

And please leave a bonus! I’m not paid a salary, so it is much appreciated.
Customer: replied 2 years ago.

Hi Franklin,


 


Following on from your help provided with the shares issue I was having the following emails have taken place...


 


MY EMAIL


 


I have sought legal advice concerning all aspects of our dispute. Concerning my shares in Mercury FX, that you have offered to buy back from me, they are 100% owned by me legally. I am prepared to sell them if we can agree a price. My offer is £7,000 for my 5% holding.


 


HIS REPLY


 


With regard to the shares which are currently not owned by you, I suggest that you sign a waiver letter to any ownership, past, present future, for which I will compensate you with £2,000.00.


 


What are you thoughts?


 


Thanks


 


Amir


 


p.s youve been a good help, will make sure I leave great feedback and a tip.

Expert:  Franklin replied 2 years ago.
Amir, thank you for your reply

What you're basically faced with is a personal decision here. You're playing a bit of a game of brinksmanship with your colleague. You're trying to hold out for as much as possible. He's trying to buy for as little as possible. Feel free to shoot back an email with a lower figure than your original offer, but not near 2,000. He'll probably come back with a more reasonable offer, and you can work out something in the middle.

Alternatively, you can stand firm to your position, and see what the response is. Either way, there's a large distance between 2,000 and 7,000, so there are a lot of opportunities for negotiation here.

I hope my answer was helpful to you today. Please take a moment to rate my service, not the outcome. If you need more info, let's continue this conversation. I spend a lot of time crafting a good answer for you, and depend on positive ratings to continue, so thank you in advance for your support.

And please leave a bonus! I’m not paid a salary, so it is much appreciated.
Customer: replied 2 years ago.
Hi Franklin,

Following n from the above, I met with my old boss today with a mutual contact there to chair the meeting.

He again said legally I do not own the shares but was willing to compensate me if I waive the right to own them. He offered me an amount of 3,000.

What is my legal standpoint here where he says I do not own the shares?
Expert:  Franklin replied 2 years ago.
Amir, thank you for your reply.

You own the shares. In your boss's previous email, he wrote "I suggest that you sign a waiver letter to any ownership." How can you waive ownership of something you don't own? Furthermore, why are you being compensating for something you do not own?

In your current situation, we've already seen that your boss is willing to move away from the 2,000 number. This website has already helped you gain an additional 1,000! Continue to negotiate until you find a number that you're comfortable with. However, keep in mind that while you may be able to recover a larger amount if you go to court, it may not be in your best interest. If this matter goes to litigation, you will most likely prevail. However, litigation is a messy and long affair, and it's best if you avoid it.

I hope my answer was helpful to you today. Please take a moment to rate my service, not the outcome. If you need more info, let's continue this conversation. I spend a lot of time crafting a good answer for you, and depend on positive ratings to continue, so thank you in advance for your support.

And please leave a bonus! I’m not paid a salary, so it is much appreciated.
Customer: replied 2 years ago.
Hi franklin,

I agree and will make sure once this is settled that I leave a nice tip as this is a great service.

Ok I agree, so what would you say the best plan of action is?

Amir
Expert:  Franklin replied 2 years ago.
Amir, at this point, I think you should see if you have a friend that's a barrister or lawyer who is willing to accompany you to a meeting with your boss, or the ultimate decision maker who will write you a check. By coming in with a recognized professional, you'll be able to convey more authority in your position, as well as enlisting his or her help to negotiate a better deal.

I highly doubt that you'll be able to recover the full 7,000 you requested. There's no need to strike a deal at your next meeting. However, at the next meeting, you can better feel out their position, as well as your own, and get a better grasp of the situation. At the very least, you should be able to recover some additional monies, simply by presenting yourself in person with a professional, such as a barrister or accountant, rather than negotiating this on your own.
Customer: replied 1 year ago.

Thanks, will email him now and see what he says.


 


Will revert back.

Expert:  Franklin replied 1 year ago.
Amir, okay.
Customer: replied 1 year ago.
Hi franklin,

Ok, he's come back with a load of rubbish now.

I want to claim my 5% shares, how do I do that? Legally you said they are mine, shall I write a letter claiming them?
Expert:  Franklin replied 1 year ago.
Good morning, Amir. Thank you for your reply.

Yes, just a simple letter should suffice. It will seem more authoritative if you have a barrister write the letter on your behalf, but they will charge for the service, probably about 50-100.

I hope my answer was helpful to you today. Please take a moment to rate my service, not the outcome. If you need more info, let's continue this conversation. I spend a lot of time crafting a good answer for you, and depend on positive ratings to continue, so thank you in advance for your support.

And please leave a bonus! I’m not paid a salary, so it is much appreciated.
Customer: replied 1 year ago.
Brilliant.

And I'm asking him to...."allocate the shares to my name"

Is that correct?
Expert:  Franklin replied 1 year ago.
Amir, that's correct. You can also use your previous language of "I'm writing to claim ownership of my shares."

I hope my answer was helpful to you today. Please take a moment to rate my service, not the outcome. If you need more info, let's continue this conversation. I spend a lot of time crafting a good answer for you, and depend on positive ratings to continue, so thank you in advance for your support.

And please leave a bonus! I’m not paid a salary, so it is much appreciated.
Customer: replied 1 year ago.
Franklin,

Can you write this for me and I will pay you?
Expert:  Franklin replied 1 year ago.
Amir, I apologize, but this website doesn't allow me to divulge personal information to you, or even allow you to divulge your personal information to me. For example, if you write down your phone number or email, it will show up as XXX.
Expert:  Franklin replied 1 year ago.
Amir, if you don't mind, could we close down this question? I'd be happy to revisit this issue with you later, but this question is now showing a "Timed Out" code, and will soon expire. Thank you.

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