Shareholders and directors have two completely different roles in a company. The shareholders (also called members) own the company by owning its shares and the directors manage it. Unless the articles say so (and most do not) a director does not need to be a shareholder and a shareholder has no right to be a director.
Can you force someone to sell a business?
No one can force you to sell them without a prior agreement in place. Agreements which might mean you have to sell could be found in an option agreement. More likely there may be clauses in your shareholders agreement (if any) or the articles of association.
What happens when you sell all your shares in a company?
If you sell all the shares in your company, the buyer is taking ownership of the company. Therefore, they are taking control of the company’s assets and liabilities. Typically, when you sell a business, the buyer will not take on the company’s liabilities which were in existence before the sale.
Is it good to give shares in business to someone else?
If you think that you might want to sell the business in a few years, remember that the person you give shares to will get a chunk of the sale price. That could be absolutely fine because their work or their investment might have helped you to grow the business much more than you could have done on your own, so you all end up with more money.
Can a company issue shares to an investor?
If you just issue ordinary shares to an investor, remember that every time you pay yourself a dividend from the company, you’ll be paying a similar dividend to the investor as well. You might not want to share out the dividends in this way, so you need to be clever about how you issue the shares.
Who is the buyer in a share sale?
If the buyer is a corporate entity the target company would become its subsidiary. In a share sale the buyer acquires the company with all its assets, liabilities, rights and obligations (including potentially some that the buyer is not aware of). Advisors will often describe this in terms of the buyer acquiring the company “warts and all”.
