purchase of shareholding and redistribution of shares

[Ascayman]

Hypothetically speaking...

4 Business partners own 25% each of a company. for arguments sake lets say that there are 10,000 shares with each director having 2,500. 1 Partner wants out and the company is buying back the shares, in order to afford to do so the other three directors / shareholders are having to sacrifice their dividends.

My understanding is that you don't actually buy back the shares, The director that wants out gets his money and as a result his shares are extinguished.

So the total share capital of the company falls from 10,000 to 7,500.

What does that mean for the remaining shareholders? does that mean they automatically become 33.33% share holders as a result? if so do they have any personal liability to pay?

[Ascayman]

KevinCamaroSS said:

If the shares issued reduce to 7,500 (by the company buying them back) then, yes, each of the three remaining shareholders becomes a 33.33% shareholder. If all the shares are fully paid up then no liability arises.

Could the remaining 3 shareholders not buy the shares of the 4th shareholder instead?

Thanks for the responses.

Are they not effectively doing that by forgoing their dividends in order that the 4th shareholder can get his money?