UK shares and directorship options?

Question

Directors shares and ownership?
I want to offer someone around 10-15% of my company i and my partner have 50% 50% - so this new person is coming in she wants 20% equity - I dont want to giver any directorship to this person just in case it gets messy however this person i would offer the 20% of the sale of the business once completed - so could i get a contract sigened that if the business was ever to be sold we would offer 20% of the sale to her. What kind of power does that one 20% holder have of if was to give ownership of 20% equity? does everyone have to agree on a business decision do we have to justify what we do to that person if 20% - what does having more than 50% mean to that director what about having 80% does that person have more say. UK law im in the UK

Answer 1

I assume you are just setting up and have not appointed any legal staff ... I would suggest you go to a Solicitor specialising in Company law = it's better to sort this out now than have massive arguments later :-)

I guess there is no reason why you & your partner can't pledge 20% of the sale proceeds to the new hire (I assume it's going to be 10% from each of you so you both need to sign contracts with her)

BUT you also need to consider = what if she wants to leave the Company before any sale ? - or what if you have to let her go ?

Re: directors - if she does not own (I think at least 5%) of the shares she has no automatic rigtht to be a Director.

Shareholder say in running the company = if you have to ask this question you REALLY need to read up on the basics of Company law before going any further.

(Share-owners have voting rights equal to their shares. So if one person has at least 51% of the shares, that person controls the company and can call meetings, vote out any existing directors & appoint & vote in new ones whenever they wish etc).