One question that clients often ask us is what rights they have as a minority shareholder in a UK company. Various laws afford minority shareholders with specific protections, which we have outlined below:
Even if a shareholder owns just 1 share in a company, he still has some basic powers, which includes the right to:
5% of the company’s shares
Owning 5% of the company’s shares gives a shareholder more ability to influence the affairs of the company, including the right to:
10% of the company’s shares
A shareholder owning 10% of the company’s shares has the ability to block the holding of a general meeting of shareholders’ on short notice.
15% of the company’s shares
A shareholder owning 15% of the company’s shares has the right to object to a variation of the class rights of the shares he holds (by requesting that the court cancels the variation).
25% of the company’s shares +1 share
To pass a special resolution, 75% of shareholders must vote in favour of it. Therefore, a special resolution cannot be passed if a minority shareholder owning 25% +1 voting shares in the company opposes the resolution. Special resolutions are required to be passed (amongst other things) to implement the following:
50% of the company’s shares
To pass an ordinary resolution, a majority of shareholders must vote in favour of it (i.e. 50% + 1 voting share). Therefore, an ordinary resolution cannot be passed if a shareholder holds exactly 50% of the company’s shares. Ordinary resolutions are required to be passed (amongst other things) to implement the following:
It is worth noting that the above rights are applicable to both private and publically owned companies – additional protections are however given to minority shareholders in public companies.
Fox Williams LLP are experts at advising entrepreneurs and businesses. For more information about how Fox Williams can help you, or for further information on the issues discussed in this article, please liaise with your usual Fox Williams contact.
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