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Hi, am hoping someone can shed some insight into a situation that has arisen.
A Ltd business has two equal partners, both have 50% shareholding and are both Directors and employees. There is no Shareholders Agreement in place (i know, sigh) and is a healthy going concern.
Recently, both Shareholders have looked to buy the other out, but to no avail or headway. Neither are willing to sell or, it would seem, have the finance to buy the other out for what would be an acceptable price based on valuations, goodwill etc.
However, the business operates out of a leased premises where the initial Lease, currently signed by both partners, expires at the end of this year.
Shareholder A has contacted the Landlord and gained agreement with the Landlord that they wish to sign a new Lease in their own name, and under no circumstances wishes to sign a new Lease with Shareholder B, as a maneouvre to try to force Shareholder B to sell their shareholding. The Landlord has agreed to this, much to Shareholder B's chagrin.
Shareholder A has stated that if Shareholder B doesnt sell their shareholding, they will force the Company into liquidation by not allowing the company to trade out of the premises when the new Lease kicks in, rather than continuing the Company as a going concern alongside Shareholder B
Shareholder B has stated that doing this will constitute a breach of fiduciary duty by Shareholder A, but that will still mean the potential disruption to business and a costly, lengthy legal process from B towards A if they actually follow through with this threat.
Shareholder A has stated they will not sign the new Lease until after the current Lease has expired, the Landlord is apparently fine with this, leaving Shareholder B in a very precarious situation.
The primary questions that B faces are :
Can A force B into selling, or winding up the Company with the view to phoenixing it, in any way that wouldnt constitute a breach of fiduciary duty via the Lease?
Does B have any rights with regard to the Lease, which is a personal one and not in the name of the Business itself?
Any insight, comment or observation would be greatly appreciated.
A Ltd business has two equal partners, both have 50% shareholding and are both Directors and employees. There is no Shareholders Agreement in place (i know, sigh) and is a healthy going concern.
Recently, both Shareholders have looked to buy the other out, but to no avail or headway. Neither are willing to sell or, it would seem, have the finance to buy the other out for what would be an acceptable price based on valuations, goodwill etc.
However, the business operates out of a leased premises where the initial Lease, currently signed by both partners, expires at the end of this year.
Shareholder A has contacted the Landlord and gained agreement with the Landlord that they wish to sign a new Lease in their own name, and under no circumstances wishes to sign a new Lease with Shareholder B, as a maneouvre to try to force Shareholder B to sell their shareholding. The Landlord has agreed to this, much to Shareholder B's chagrin.
Shareholder A has stated that if Shareholder B doesnt sell their shareholding, they will force the Company into liquidation by not allowing the company to trade out of the premises when the new Lease kicks in, rather than continuing the Company as a going concern alongside Shareholder B
Shareholder B has stated that doing this will constitute a breach of fiduciary duty by Shareholder A, but that will still mean the potential disruption to business and a costly, lengthy legal process from B towards A if they actually follow through with this threat.
Shareholder A has stated they will not sign the new Lease until after the current Lease has expired, the Landlord is apparently fine with this, leaving Shareholder B in a very precarious situation.
The primary questions that B faces are :
Can A force B into selling, or winding up the Company with the view to phoenixing it, in any way that wouldnt constitute a breach of fiduciary duty via the Lease?
Does B have any rights with regard to the Lease, which is a personal one and not in the name of the Business itself?
Any insight, comment or observation would be greatly appreciated.
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