What powers does a shareholder have after acquiring a minority stake in a company?

Company Law

This question often arises when a purchaser considers acquiring a minority stake in a private company. Under the Companies Act 2016, shareholders with a minority stake in a private company have the following rights and powers:

Minority stake Rights and powers
At least 5% of the total voting rights

 

 ·       Require the private company to circulate a resolution that may properly be moved as a written resolution.

 

·       Require a meeting of members to be convened if more than 12 months has elapsed since the end of the last meeting of members convened pursuant to a requisition under the Companies Act  2016 and the proposed resolution is not defamatory, vexatious or frivolous.

 

·       Give notice to the private company to prevent the re-appointment of an auditor.

 
At least 10% of the total voting rights

 

 ·       If such shareholders consider that the payment of fees of the directors and any benefits payable to the directors including any compensation for loss of employment of a director or former director, was not fair to the private company, within 30 days after they have knowledge of such payments, they may require the company to pass a resolution to approve the payment.

 

·       Demand voting on a poll before or on the declaration of the result of voting on the show of hands at any meeting of members.

 
At least 10% of the total voting rights in the relevant class of shares

 

 If the rights attached to shares in that class of shares in the company are varied, apply to the Court to have the variation disallowed.

 
At least 10% of the issued share capital of a company or a lower percentage specified in the constitution

 

 Convene a meeting of members.

 

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This post first posted on LinkedIn in October 2024.

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