EMI shares, earnouts and cap on liability

[MarkStork]

Hi All,
I am Minority Shareholder and after the acquisition the payout period has been extended from 2 to 3 years. I reckon more money.
This requires me to sign new agreement.

I have done some research in the interim and it looks like it is common for minority shareholders to have a cap on (tax) liability in the agreement.
This was not the case in the initial share purchase agreement.

I am worried that if for whatever reason things go south and HMRC does their magic, recalculate the share prices and asks to pay more this will eat most of my earn-outs while the other shareholders won't even notice.
What do you think should I ask them to include this protection in the new agreement?

Please advise.
Thanks

[atticus]

This can be a very complicated area requiring specialist tax advice. What you are asking is not clear - in each of the 2 quotations below I have slightly rewritten your question.

If you mean:

What do you think: should I ask them to include this protection in the new agreement?

my answer is "yes", but take advice to ensure that the new wording affords you sufficient protection.


If you mean:

What do you think I should ask them to include this protection in the new agreement?

my answer is that you should take specialist professional tax advice.

[MarkStork]

This can be a very complicated area requiring specialist tax advice. What you are asking is not clear - in each of the 2 quotations below I have slightly rewritten your question).

If you mean:my answer is "yes", but take advice to ensure that the new wording affords you sufficient protection.


If you mean:my answer is that you should take specialist professional tax advice.

The director of the acquired business has offered his accountant to work out the tax owed to HMRC for all the shareholders but not sure if there are any strings attached to this arrangement I should probably seek out an independent tax advise.

[atticus]

Taking your own independent advice from someone who owes you a legal duty of care would be the best course, if you can afford it.