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Alex J.
Alex J., Litigator
Category: UK Law
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Experience:  LLB, LPC, DELF
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the company being wound up owns 95% shares in a foreign subsidiary

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the company being wound up owns 95% shares in a foreign subsidiary limited company. What would normally happen to those shares?
Submitted: 1 year ago.
Category: UK Law
Expert:  Alex J. replied 1 year ago.
Hi

Thank you.

When the company is wound up the creditors are repaid and if there any left over funds or assets these can be paid back to the shareholders.

The shares will then cease to exist when the company no longer exists.

Does the company own any assets?

Kind regards

AJ
Customer: replied 1 year ago.
I understand that the uk company when it is wound up the shares would no longer exist. But i'm wondering what happens to the subsidiaries shares as the subsidiary is a separate entity. How will the liquidator know what to do with those shares? Would he for example offer them to the person who owns the other 5% first?
Expert:  Alex J. replied 1 year ago.
Hi

Thank you.

Assuming there are no restrictions on the transfer of those shares and the subsidiary will carry on trading the liquidator will sell them for the best realisation of the creditors and shareholders.

It maybe that the shares have no value to anyone else because there are restrictions on the transfer of them in the articles or shareholders agreement in which case the 5% holder may have pre emption rights on the shares.

Do you want to buy the shares? If so go and make an offer to the liquidator as you will probably be able to buy them at a discount.

Kind regards

AJ
Customer: replied 1 year ago.
I guess the 95% shareholder which will be the liquator will use the shareholders agreement. The agreement has a call option to buy the 5%. Does this seem likely as it makes it easier to sell or dissolve?
Expert:  Alex J. replied 1 year ago.
Hi

Thank you.

The company that owns 95% will be dissolved and won't be able to exercise the call option.

You would be better off exercising it first and then selling the shares to which ever party you want to have them. You can then dissolve the company.

Does it have any creditors?

Kind regards

AJ
Alex J., Litigator
Category: UK Law
Satisfied Customers: 2493
Experience: LLB, LPC, DELF
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