Hello, a friend* of mine is being forced out of their own company by their investors (who are the vast majority of the shareholders). From what they are telling me, the investors are giving them mere hours to make decisions about the governance of their company i.e. threatening to dissolve/bankrupt the company if they don’t comply with the investor demands.

They have already been consulting a solicitor, but after weeks of talking to them they seem no further forward in giving them answers, and from an outside and ill-informed perspective the solicitors don’t seem to understand the speed or scale of what is happening to my pal.

Is there anyone here who deals with shareholder investment (corporate?) law in England, who can maybe lend a professional hand? My email is kitdotcarruthersatgmaildotcom (obvs subbing in the ‘dot’ and ‘at’) and I can pass you their details.

Many thanks in advance.

*an actual friend, this is nothing to do with me and my business!

Other than this happened to my wife’s parents and their business, forced out of jobs by investing company.

If they’ve flogged off enough of it that they don’t have a controlling interest any more, it’s not their company any more is it surely? Hang on, your mate isn’t Sam Altman is it?

Hello, a friend* of mine is being forced out of their own company by their investors (who are the vast majority of the shareholders)

Technically it’s not their own company, they just own part of it. If the majority of the owners want to do X, you don’t have a say in the matter (other than resigning).

As long as what he’s asked to do isn’t illegal or breaches financial regs eg trading whilst insolvent, he doesn’t have much choice, he either complies, resigns or gets dismissed.

More fool them for not retaining a controlling interest…

The articles of association (and possibly any separate shareholder agreement) will cover this.  If they are scraping around at the 11th hour it’s likely that they didn’t get legal advice about the investment in the first place – any corporate lawyer would have covered the “what if” scenario of the investors wanting to replace the management.  They may have employment rights as well as their shareholder rights.   They will have a copy of the company’s articles and know how many and what type of share they hold.  With that knowledge they should be able to approach any commercial law specialist and get advice – it will cost.  For contentious stuff you will want the senior people not the trainee!  Make sure you go to a proper commercial lawyer not some family law firm that does a little bit of simple company stuff on the side.  You probably want to meet them face to face – so I would go to someone “local” rather than someone found on a MTB forum.  Finding decent commercial lawyers isn’t hard for anyone running a credible business – they are delighted to have their names associated with high profile investment, and hand around trade associations, business networking events, and chambers of commerce hoping to sweep up potential clients.  It WILL be expensive. If they offer a meaningful opinion without it costing £1000 either your case is a total mess or you are taking to the wrong firm!  If  it involves more than reading some docs, firing you an email and talking you through it – expect that to multiple up.  I’d be surprised if a solution doesn’t become five figures; that may not be a cost you can put through the business.  

one point to consider – assuming the lawyer has a magic solution to avoid the investors executing the decision they want to take now, how are you going to continue to run the business with acrimonious shareholders / board.  I’ve done that – it’s an absolute drain on you and the business.  It may be best to negotiate an escape.

Yup you need a specialist in corporate or company law (two ways of saying much the same thing). I would call myself a commercial lawyer, but not that type of commercial lawyer.

i.e. threatening to dissolve/bankrupt the company if they don’t comply with the investor demands.

Unless there is enough value in the liquidation of the business to make this an attractive option financially, seems like the ‘investors’ are cutting off their noses to spite their face, just to get rid of your mate. Sounds like a complete breakdown in the relationship, and he/she should be getting some advice on the best way to negotiate an exit and stop it going nuclear.