Autumn 2006 Newsletter Contents Into The Unknown Season Of Goodwill Farewell Andre Toon Done Doon Day Of Reckoning Artistic Licence Gizmos Again A Free Lunch Sweet As Nectar Security Concerns Going For A Spin The Cap Does Not Fit While It's Hot? Code Cracking Bad Connection Broken Trusts You Can't Take It With You Dividend Returns IR35 RIP? Spam Spam Spam Breaking Up Duty Calls Time Shift Moving Vans

Breaking Up Going into business with someone is sometimes described as marriage withoutthe fun. Breaking up a business can be every bit as painful and expensive as a divorce. In both situations, you probably need a good lawyer, and you need to know your rights or you may get the rough end of the deal. It can be particularly difficult in a company with unequal shareholdings. A holder of 75% of the votes can, on the face of it, do practically anything with a company - the minority cannot get appointed to the board, and cannot block a special resolution. However, there are company law rules to prevent the majority acting in a way that is "unfairly prejudicial" to the minority (such as selling off the company's property cheaply to yourself). It's a bit unwieldy to take a case based on this rule, but it's one possibility. Another is to argue that the business is a "quasi-partnership" - a common situation among small companies. If so, the minority can apply for the company to be wound up, or for the majority to buy the minority shareholding at a fair price. A recent case looked at this procedure. The two parties who had fallen out owned 10% and 90% of the company. The 90% holder offered to buy the 10% at a fair price - which would be considerably less than 10% of the worth of the whole company, because a minority shareholding is always heavily discounted. The 10% holder argued that this was unfair. The Court of Appeal agreed. A share in a partnership is not usually valued using the same discounts as company shareholdings, and a quasi-partnership should be valued in the same way. The fair price was the non-discounted figure. If you are having difficulties with your partners or fellow-shareholders, the best solution is to find a way to agree. If you can't agree, you will need advice, and we will be happy to help.