Shareholders?

F

Father_Ted

Guest
Hi,
I am a long time 'listener' of Askaboutmoney and first time poster...and all of that...
Basically I am the director of a telecommunications limited company, the other director is my wife. The business is doing very well despite the recession and has not signs of slowing down, thank god! The business has a turnover of 120k+ per year. We have a lot of potential extra business we could be doing, but firstly we have to invest the companys profits back in to it in order to achieve this. After all the bills are paid every month, I can only and will only put about 3k back in to invest back into our own infrastructure. This is a very slow progression for us and frustrating.
If we could get hold of 200-300k from potential shareholders, the business would begin to boom over night.
But I am stomped on the whole shareholder thing. I mean, how does it work? Whats in it for the Shareholders at the end of the day?
We already have a 30k loan from the bank, I could get more but want to avoid that route, interest fees and all that and it would also be handy to have a few extra heads around me giving ideas as its been all my own venture up to now.
 
Shareholders are the "owners" of a company.
The directors work for the shareholders.
Shareholders are entitled to a % of dividends paid by the company depending on the shareholding % and types of shares.
The % of ordinary shares held decides the control of the company.
A shareholder would expect the value of the shares to increase, so when sold in the future, a gain would be made.
Investors may invest if they get a certain % of shares in the company - this is up to you to negotiate, and you would probably have to have the company valued for this exercise. Investors would generally also require due diligence to be carried out.

That is just a very brief off the cuff summary - you should speak to an accountant about your options.
 
An hour with a good corporate lawyer may also be worth your while. Such matters come up all the time and are dealt with in shareholders agreements.
 
Bank loans are expensive but at least you're not giving away part of your business which is what happens when you invite shareholders.

Either way, bank or shareholders, both will want to be repaid.
 
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