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Senior Partner, Solicitor
Category: UK Law
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Experience:  30 years experience in business law and related topics such as employment law
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Within our business one pair of shareholders ( brothers) who

Resolved Question:

Within our business one pair of shareholders ( brothers) who control 50.5% of shares have declined an MBO without defering to the other portion of shareholders, 3 individuals.

I have been informed that they have done so as they believe as they hold the majority shares that they would vote against an MBO and therefore do not need to inform the other shareholders, would they be right.

As a part of the 'other' shareholding can i do anything about this????
Submitted: 10 months ago.
Category: UK Law
Expert:  Senior Partner replied 10 months ago.
Thank you for your question. If they hold the majority of the shares then no offer for the shares can be successful unless they accept. It is of course possible for an MBO to take the form of a business purchase rather than a purchase of shares but even that if the purchasers were also directors would require shareholders approval. So in essence as shareholders they can decline an offer without consulting anyone else. it does however seem somewhat high handed not even to discuss.

If this is a private company there is little you can do about it other than resign and start up in competition unless you could establish that the majority shareholders were deliberately running the company in a way that was prejudicial to the interest of the other shareholders.

Is there any issue apart from the refusal to look at an MBO?
Customer: replied 10 months ago.


Thanks for your reply.


 


The shareholders (100%) are looking at a sale and had moved down a sale route with another company until the other party pulled out only 1 month ago, this triggered an MBO approach from 2 directors.


It feels and looks as though the 50.5% do not want this to happen for personal reasons, they dont like the directors involved.


 


If i can do nothing apart from ask for a shareholders meeting and give them my view of not being informed then so be it, they are acting very high handed i believe.


 


This may force the 2 directors to leave which will be a bad move for the business.


 


Thanks again

Expert:  Senior Partner replied 10 months ago.
Do you have a shareholders agreement at all? Is there anyway of triggering a compulsory sale through that? I assume not.

If the the 2 directors are offering a fair price then it would be sensible to at least have a meeting to discuss it- as you say if they leave it could be quite damaging and that is often the result of a failed MBO
Senior Partner, Solicitor
Category: UK Law
Satisfied Customers: 13231
Experience: 30 years experience in business law and related topics such as employment law
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