Collegues, Your URGENT Advice please
Nu.Delhi.Law.Fora.
(Querist) 05 September 2010
This query is : Resolved
Hi All,
A client of ours is a technocrat and investor by himself, wishes to be CMD/MD forever (preferably) and wishes to have a fixed % of profit always and also wishes to utilise his ESOP as & when he thinks fit. He also wishes to appoint some nominee when he is not present (read after his quits/demise). In essence, he wishes to control the Co. for all days to come.
Now Co. i.e. ABC Ltd. has received Cft of Incorporation and it has created a a WOS i.e. 100% subsidiary of an US based Co. wherein ABC Ltd. needs to transfer funds. The total number of shares of the US subsidiary company is 1000 shares @ 1$ per share. In which, 900 shares will be allotted to M/s ABC Ltd. and balance 100 shares will be allotted to our Client with an understanding that our Client will transfer back these shares (100 shares in his personal name) at the same face value of 1 $ / per share at the time of his resignation from the present post (CMD of M/s ABC Ltd.). On his resignation the 100 share will be transferred to new Chairman nd Managing Director.
The respective earnings of the 100 shares held by our Client individually in the US Company shall be treated as the earnings of M/s ABC Ltd. A Shareholders agreement need also to be executed.
Share-holding pattern is that he holds 30% in the shape of following: 30%:10%:15%:15%:30%:Nil total being six members.
our Client is to complete his share of investment in proportion to his / wife's shareholding in the company immediately upon the signing of the share holder’s agreement.
I understand its little long facts, yet I would appreciate if there is any considered opinion.
Thanks in anticipation.
Rabin Majumder
Advocate & Attorney
For Nu.Delhi.Law.Fora
New Delhi
nudelhilawfora@gmail.com
Advocate. Arunagiri
(Expert) 06 October 2010
With the 10% holding your client cannot control the company. The company is having rights to impose conditions for buying back the shares of your client if he quits the company.
Even if your client is holding 100% shares in a public limited company his directorship has to be elected / confirmed in the AGM.
