Hope I explain this correct Simplified if possible. I have shares in a LTD company that owns residential rented property. Me and 2 others . One lives in America, he has nothing to do with the business other than being a share holder. The other lives down south who is the majority holder. Me 17 shares America 38 shares Down south 68 shares None of us take dividends we just pay off the mortgages with the profits. Basically I either want dividends or I want out. Paying dividends isn’t the business model so wouldn’t go down well, so where do I stand if I want out? If Down South is not willing to buy me out, where do I stand? Hope that’s understandable
Is there a share agreement in place? Are the company articles standard, or anthing unusual about its purpose and governance? I.e. what happens if one of the parties wants to relinquish their shares? If there isn't, you could sell to anyone who liked the look of the investment. But in all honesty, most people, and probably moreso at the moment, would like to deem revenue from it and earn income from the business. There are a few accountants and solicitors on here who may offer a bit of private guidance away from prying eyes which I'd probably recommend before sharing too much detail. Hope it works out for you.
I realise I can sell to anyone but that would mean finding someone that would buy them under the same agreement, ie, no dividends etc. We don’t Have any agreement documents just an understanding that profits pay off mortgages for the end game. There’s nothing in place to say one share holder has to buy another one out but I think I would find it hard to find a buyer to agree to there terms. My main question is , if the main share holder doesn’t want to buy me out where do I stand?
Yes I could but finding a buyer would be different due to the business model of paying off mortgages with profit
Daft question but if the profits were paid out in dividends how would the mortgages be paid? Is it that they're being paid much quicker than they need to be so you own the property outright soon?
I would say you're stuck unless you source your own deal. In which case, you may as well sit on them to benefit from the end game yourself. Or you could bring it up casually and suggest some interim payments. There may be some tax advantage taking some profits now if people havent used up allowances (ask an accountant though, dividend taxation has changed in recent years so would have to be considered in your respective cases).
Yes.... The mortgages are interest only. We own 3 outright. So basically once the monthly repayments are paid and maintenance/costs are deducted the remainder is profits which we use to pay down the mortgages.
I do not see how anyone could advise you without seeing the articles of association when the limited company was first formed. As someone else posted you could (and probably did) adopt standard articles. However, sounds like you have at least a five figure investment, properly instruct a specialised lawyer and give them the full facts (not just the bits you like) and then decide where you go
Thanks..... I’ll look into that... I didn’t want to rock the boat before getting some kind of advice tho.
This, I give all my contracts to a Solicitor to look over and advise, usually cost around £300 dependant on size and contents, either way it would be money well spent.
Nobody needs to know you have been to see a solicitor. Make it clear to the solicitor you are instructing them personally and not on behalf of the company
Thanks. I was referring to the Articles of Association. I don’t have any paperwork regarding this . I don’t think we have any. My main issue is as the minority share holder and not a director then I don’t have the power to change the business model to receive dividends and will struggle to find a buyer to purchase my shares under the said business model. I’m assuming I’m stuck with the shares until the end game
Google companies house and press start now, find company and then click on filing history. The articles should be the first doc filed on there. As a shareholder you can demand to see all company records at the registered office or the alternative filing address, again this will be on companies house. Shareholders don't run the company but can effectively remove the directors, vote on dividends etc at the AGM Cut and paste this to get started https://beta.companieshouse.gov.uk/