Will a shareholder dispute effect the winding up of my Company?

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Gibson Hewitt commonly deal with shareholder disputes in deadlock when its shareholders can’t agree on the winding up of the company.

To place a Company into voluntary liquidation, the members of the Company must vote to wind up the Company voluntarily. This is done by calling a general meeting of members to pass two separate resolutions:

  1. Special resolution; this resolution must be passed to wind up the Company voluntarily
  2. Ordinary resolution; after passing the special resolution, the Company must appoint a Liquidator. The ordinary resolution ensures that a Liquidator has been appointed to wind up the Company. The proposed Liquidator must also consent to act.

At a meeting of members, the members must vote for or against passing a special resolution to place the Company into liquidation,

The Companies Act 2006 states that for the ordinary resolution to be passed, over 50% of the shareholders must vote for the appointment of the proposed Liquidator. It also states that for the members to pass the special resolutions, over 75% of the shares must vote for the winding up of the Company.

If these requirements are not met then the Company will not be able to pass such resolutions.

Shareholder disputes can be a big problem when winding up a Company as they are able to block the passing of such resolutions if they hold enough shares of the Company.

For example, if a member holds 30% of the shares and votes against placing the Company into liquidation, the special resolutions of the Company will not be passed and the Company will not be wound up voluntarily.

On the other hand, if the same member either votes to wind up the Company or abstains from voting altogether while the other members vote for the passing of such resolutions then the special resolution will be passed and the Company will be wound up voluntarily.

A shareholder that votes against the resolutions can be a very large obstacle when attempting to wind up a Company voluntarily and thus the conversation regarding liquidation must be handled with care.

If you have any further queries about shareholder disputes, do not hesitate to contact Lynn Gibson at lynn@gibsonhewitt.co.uk.