Query on structure of BES funded company

[Dave Vanian]

An acquaintance bought BES shares in a company years ago for around €5,000 and received 600 "B Ordinary Shares". More recently she received a letter from the company advising that, although the company has made considerable progress over the past ten years, it has accumulated substantial trading losses and has a substantial balance sheet deficit, which indicates a nil value for its shares for the foreseeable future.

One of the family who run the company has offered to buy back her shares for €900.

My acquaintance has a gut feeling that, notwithstanding the losses and deficit, the company's fortunes are actually improving.

Questions: -

(1) If she refuses to sell, can she simply hold her shares even if a majority of the other BES investors decide to sell?

(2) More importantly, is there any real guarantee or safeguard that as a minority shareholder she would get a fair share of the company's returns if its fortunes do turn around in the future?

She's concerned that the controlling family would have the potential to keep the price of B-shares artificially low even if, for example, they (presumably A-share holders) were in a position in the future to pay themselves a dividend. The company is not publically traded.

Any pointers welcome.

 

[Nige]

She needs to look at the legal documents first, the memo and Arts of the company (these are a matter of public record, she can order them from the CRO if the company doesn't give her a copy) and the shareholders' agreement (if there was one) - which she should have or her solicitor maybe.

These documents will set out what the company can do in relation to the declaration of a dividend, the obligation to sell shares and so on.