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I have shares in a company but no control!

How do I protect my investment?

Minority Shareholder Agreement

I invested all this money into a company and I have no control!  Sometimes an investor contributes a significant amount of capital into a company while the founders retain the majority of the shares and continue to work in the company. A situation like this can result in the shareholders that have made the financial contribution having little or no control over the way the company is run. The solution is to balance out the power dynamic with a Minority Shareholder Agreement.

A person who purchases shares in a company can ask the other shareholders to enter into a Minority Shareholder Agreement. This is done where the parcel of shares purchased only amount to minority interest in the company (less than 50% of the shares).  The Minority Shareholder Agreement gives more power to the minority shareholder, balancing out the lack of voting rights under the Constitution of the company.I have shares in a company but no control! How do I protect my investment?

A Minority Shareholder Agreement can be good protection for the investor who wants some say in how the company is run, but does not own a majority of the shares. It also evens out the power differential between majority and minority shareholders. Insist on a Minority Shareholder Agreement before you hand over your money.

The Minority Shareholder Agreement pack includes a Minority Shareholder Agreement, commentary which explains the principles of minority shareholder oppression, and a draft letter advising the client about their rights as a minority shareholder.



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