Company voting rights between partners

Question

Company voting rights between partners

04-Oct-2023 (In Corporate Law)

My partner and I own a business 45% - 45% with remaining shares with investors. Now my partner is looking to split his shares between himself and his wife as 23% + 22%. Will this give him more voting rights in any situation since they are 2 people with majority shares? Is there any additional benefit he will have with a representation of 2 people while i hold all shares on my own. should i also split my shares with my wife?

Answers (2)

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Advocate Bharat Pandirao Pawar LawRato · Accepted Answer · 2016-10-09T14:40:03+05:30

Answer #1

It depend up on the your necessity. As your partner do transfer of share it does not mean you should do it in same way. No of representation based on no of share is totally different issue not any way concern with it.

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LawRato LawRato · Accepted Answer · 2016-10-17T13:24:39+05:30

For the sake of discussion, let's consider you and your partner to be two shareholder groups. The number of shareholders in a group is not relevant. The rule of law is each equity share has one vote. As such, there is no reason for concern if there are two shareholders in one group, while your group has only one. Who within a group actually holds the shares is relevant only if the Articles of Association of your company stipulate the need for a director to hold qualification shares. What is relevant in your specific case is the provision in your Shareholders' Agreement concerning management control through board representation. This would generally depend on the percentage of shareholding of each group, and should be independent of number of shareholders in each group. This is critical given the leverage available to the investor holding 10% stake (who can form an effective majority in collaboration with any one partner holding 45%). Trust this clarifies. Best wishes.