Share Buy Back

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warnerbottom

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Hi

I was recently given shares (bought for €5) in the company that I work in as a prelude to a director 'buy in' deal. Prior to this I was a non shareholding technical director.

After seeking advice, I decided not to go ahead with the buy in (because of market changes etc).

Understandably the company now want their shares back. The person selling the shares now has the hump with me for ruining her plans and I anticipate her trying to make it difficult for me to continue working in the firm.

I have three questions:

1. What is the best way to go about transferring the shares back and are there an legal implications for me having being a shareholding director for less than a full year?

2. If I am going to be forced out, should I try to get a severance package agreed before signing over the shares?

3. What would be the position if I refused to sign over the shares until my position is clarified? Could the company just take them back?

Thanks

Warner
 
Several questions: Did you sign an agreement to purchase the shares? If Yes has your decision to change your mind been within the 7 day 'cooling off' period allowed within the EU to rescind or change your mind in regards to a commercial purchase or agreement?

1) Were you 'granted' the shares? For example they would have been granted or 'earned' via 'sweat equity' and/or granted on a performance based agreement or did you have to pay cash money for them?



2) When do (did?) they 'vest'? For example after you worked 12 months or immidiately? You would find the 'vesting' terms in your Shareholder Purchase Agreement.

3) Do you have an 'Employment Contract'? If yes what are the conditions for voluntary or involuntary exit from the contract?

4) What do the term and conditions listed within your Memo and Arts say in reguards to Directors duties, responsibilities, resigning, or being removed as a Director.

5) If you accepted and signed the forms for an Irish Directorship seat you are held responsible (and liable) for all the goings on with your Limited company whether it's for one day or a thousand days.

6) Is the company compliant with all the rules and regulations under Irish limited company law? Such as: are the books current and have the Board of Directors and/or Shareholder meetings been held and recorded correctly?

7) Did you sign a 'Shareholder Agreement' before you received your shares? If yes then the terms and conditions to buy and or sell will be listed within this document. Typically you can't just give them back and say you don't want to 'play' shareholder anymore.


If you were required to BUY the shares for cash and committed to buy them (in writing) but now refuse to pay for them because you just don't feel like buying them any more, you may have a legal problem as you have cost the company investment capital that you of your own free will, committed to invest and that (naturally) they counted on receiving. BUT if during your Due Diligence research into the financial, operational and business development of the company you found either irregularities or you simply lost confidence in the company BEFORE you committed in writing to purchase the shares then you can walk away (so I believe) from buying the shares.

MOST IMPORTANT READ ALL YOUR AGREEMENTS, the Memo and Arts agreement, the Shareholder agreement, Employment agreement, the Director agreement as so on.

If you have shares in the company but did not pay for them or meet the terms and conditions to aquire these shares then you don't own them.

Do you have the actual share 'certificates' ?

You can ALWAYS resign as a Director BUT you are STILL liable for what happened in the company under your Stewardship as a Company Director.

This is my humble opinion.....perhaps other AAM folks can impart sagacious wisdom on this subject?
 
Several questions: Did you sign an agreement to purchase the shares? If Yes has your decision to change your mind been within the 7 day 'cooling off' period allowed within the EU to rescind or change your mind in regards to a commercial purchase or agreement?

1) Were you 'granted' the shares? For example they would have been granted or 'earned' via 'sweat equity' and/or granted on a performance based agreement or did you have to pay cash money for them?
1.a Did you BUY them from anotehr 'shareholder' or the company?


2) When do (did?) they 'vest'? For example after you worked 12 months or immidiately? You would find the 'vesting' terms in your Shareholder Purchase Agreement.

3) Do you have an 'Employment Contract'? If yes what are the conditions for voluntary or involuntary exit from the contract?

4) What do the term and conditions listed within your Memo and Arts say in reguards to Directors duties, responsibilities, resigning, or being removed as a Director.

5) If you accepted and signed the forms for an Irish Directorship seat you are held responsible (and liable) for all the goings on with your Limited company whether it's for one day or a thousand days.

6) Is the company compliant with all the rules and regulations under Irish limited company law? Such as: are the books current and have the Board of Directors and/or Shareholder meetings been held and recorded correctly?

7) Did you sign a 'Shareholder Agreement' before you received your shares? If yes then the terms and conditions to buy and or sell will be listed within this document. Typically you can't just give them back and say you don't want to 'play' shareholder anymore.


If you were required to BUY the shares for cash and committed to buy them (in writing) but now refuse to pay for them because you just don't feel like buying them any more, you may have a legal problem as you have cost the company investment capital that you of your own free will, committed to invest and that (naturally) they counted on receiving. BUT if during your Due Diligence research into the financial, operational and business development of the company you found either irregularities or you simply lost confidence in the company BEFORE you committed in writing to purchase the shares then you can walk away (so I believe) from buying the shares.

MOST IMPORTANT READ ALL YOUR AGREEMENTS, the Memo and Arts agreement, the Shareholder agreement, Employment agreement, the Director agreement as so on.

If you have shares in the company but did not pay for them or meet the terms and conditions to aquire these shares then you don't own them.

Do you have the actual share 'certificates' ?

You can ALWAYS resign as a Director BUT you are STILL liable for what happened in the company under your Stewardship as a Company Director.

This is my humble opinion.....perhaps other AAM folks can impart sagacious wisdom on this subject?
 
Hi Burritoqueen.

Thanks for the reply. Some good points there! I have clarified some of them directly under yor remarks.

I'm not interested in holding on to the shares. I'm more interested in what will happen after they are signed back. Will handing them back weaken my position?

BurritoQueen said:
Several questions: Did you sign an agreement to purchase the shares? If Yes has your decision to change your mind been within the 7 day 'cooling off' period allowed within the EU to rescind or change your mind in regards to a commercial purchase or agreement?

I didnt sign an agreement. It was only an agreement in principle. They looked to change some of the terms towards the end and I was advised not to follow through.

1) Were you 'granted' the shares? For example they would have been granted or 'earned' via 'sweat equity' and/or granted on a performance based agreement or did you have to pay cash money for them?

They would have to be paid for but again I had not signed any agreement.

2) When do (did?) they 'vest'? For example after you worked 12 months or immidiately? You would find the 'vesting' terms in your Shareholder Purchase Agreement.

They came into effect straight away.

3) Do you have an 'Employment Contract'? If yes what are the conditions for voluntary or involuntary exit from the contract?

I dont have a contract. Crazy, I know!

4) What do the term and conditions listed within your Memo and Arts say in reguards to Directors duties, responsibilities, resigning, or being removed as a Director.

I have never seen this doc. Not sure if it exists.

5) If you accepted and signed the forms for an Irish Directorship seat you are held responsible (and liable) for all the goings on with your Limited company whether it's for one day or a thousand days.

Is this only for the period as a director? Or would I be liable for any before or after periods?

6) Is the company compliant with all the rules and regulations under Irish limited company law? Such as: are the books current and have the Board of Directors and/or Shareholder meetings been held and recorded correctly?

Books are current. Board/shareholders meetings are ad hoc with no minutes.

7) Did you sign a 'Shareholder Agreement' before you received your shares? If yes then the terms and conditions to buy and or sell will be listed within this document. Typically you can't just give them back and say you don't want to 'play' shareholder anymore.


No, I didnt sign a shareholders agreement.


If you were required to BUY the shares for cash and committed to buy them (in writing) but now refuse to pay for them because you just don't feel like buying them any more, you may have a legal problem as you have cost the company investment capital that you of your own free will, committed to invest and that (naturally) they counted on receiving. BUT if during your Due Diligence research into the financial, operational and business development of the company you found either irregularities or you simply lost confidence in the company BEFORE you committed in writing to purchase the shares then you can walk away (so I believe) from buying the shares.

the latter is the case. However, I am concerned about being forced out because of the "your either with us or against us" mentality.



If you have shares in the company but did not pay for them or meet the terms and conditions to aquire these shares then you don't own them.

Do you have the actual share 'certificates' ?

No. none were actually issued. Its more a matter of changing info in CRO.
Click to expand...
 
Firstly being a director and being a shareholder are completely seperate.
Based on your previous reply, I would say that there was no legal advise taken when the sahres were sold.
The law regarding share purchases in this case will be the memos of (A&A) articles and association (these will govern various things) looks like you didn't sign a shareholders agreement so these are the only thing to check out.

warnerbottom said:
1. What is the best way to go about transferring the shares back and are there an legal implications for me having being a shareholding director for less than a full year?
Click to expand...
You simply sell the shares back.
No implications.

warnerbottom said:
2. If I am going to be forced out, should I try to get a severance package agreed before signing over the shares?
Click to expand...
Yes, you own part of the company, that cannot be taken away from you, unless there is something written into the A&A, which I doubt.
So you have powers over the company, you might be able to appoint directors, any changes to the company have to be agreed by you.

warnerbottom said:
3. What would be the position if I refused to sign over the shares until my position is clarified? Could the company just take them back?
Click to expand...
Again you own part of the company, they cannot take that away from you, unless it is written into the A&A, which is not in standard A&A.
 
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