Enforced share buy-back?

[Legend83]

Hi all,

A friend of mine is being offered a 10% stake as an employee in the Ltd company he works for following a buy-out by a US company.

The President of the parent company has stipulated that if he leaves the company following the share allocation, the shares will be bought back by the company at current market value.

Can an ex-employee be forced to sell their shares back to the company under Company Law?

Ta,

Ed

[therealpigdog]

As always, it depends.

There may be something in his service contract, in a shareholders' agreement, or in the articles of association of the company.

[wattsm666]

Nothing under Company Law, but it can be imposed by a shareholders agreement that your friend may have to sign as a condition of the share issue or under a service contract. All quite normal.

[StevieBee]

Your friend should also be aware that he will be liable for the tax on the share value at the point at which he is given them.

[Legend83]

StevieBee said:

Your friend should also be aware that he will be liable for the tax on the share value at the point at which he is given them.

Are you saying that the issue is taxable too? I.e. that if the shares are issued below market value he would be taxed immediately on the difference?

ETA: yes it would - just remembered by benefits-in-kind rules!!

Edited by Legend83 on Monday 2nd March 15:24