How can you prevent someone from buying out your company and dissolving it the next day to screw you over (you have equity in the company) I'm thinking about a hypothetical scenario. Let's say someone wants to buy out your company (LLC if it matters) for $1 million. Let's say you annoy the buyers by requesting some equity in the company, and they give you your equity, but only $100k cash instead, and the next day they liquidate and dissolve (yes, I guess they're losing money, so it seems stupid to do this, but let's say they're mega rich and have money to spare). Are there any legal clauses that can be added to a contract to prevent someone from just screwing you over by dissolving the company that you have equity in the next day to &quot;screw you?&quot;. I guess the nature of a buy-out is that they bought your company, so they can just do whatever they want at that point unless you're on the board and have significant voting power (in fact, maybe that's the only way to prevent such a scenario - by retaining voter power). A bit contrived perhaps, but curious about this.
Controlling shareholders of a company have a fiduciary duty to other stockholders (see the section on controlling stockholder/company in the reference). That is, their decisions must be guided by the legitimate interests of the other stock holder, they can't privilege their own outcomes, or maliciously torpedo the interests of the other stockholders. If you think they have deliberately made bad decisions just to screw you, you can sue them for breech of their fiduciary duty. Of course their defense can be that they made decisions for perfectly rational reasons that respected their fiduciary duty, but simply turned out badly. You'd have to provide evidence that the decisions were reckless and/or malicious.
Directors don’t own companies - they manage them Shareholders own companies. So, if you are a director and die, the legal upshot is you are no longer a director and the company may need to replace you in accordance with its rules. If you are a shareholder, then, subject to any other contracts like a option for the company or other shareholders to buy the shares of a deceased shareholder, the shares will be distributed in accordance with your will or the laws of intestate succession if you don’t have a will. Whoever owns the shares with have the same rights as you did.
Yes Companies can own companies - that’s what subsidiaries are. On a practical level, you know this is true because you actually have an example. Companies House would not have allowed its registration (barring error) if it was illegal. Why can’t it open a bank account? Banks (or any other business) can choose who they will and won’t do business with. Unless it’s discrimination on the basis of a protected characteristic, it’s not illegal. Since juridical persons don’t have protected characteristics (apart from nationality) it’s virtually impossible to illegally discriminate against them.
Termination. The binding provisions may be terminated by mutual written consent of the parties; Provided, however, that the termination of the Binding Provisions shall not affect the liability of a party for breach of any of the Binding Provisions prior to termination. It basically says that you and the company can free each other from the contract or any part of it — by signing another agreement. This is limited though: if either of you have breached the original contract and become liable (e.g. one of you owes the other heaps of money for damages), then those liabilities will remain. ... which is nonsense of course — because you always can free each other from any liabilities to each other if you both want it.
It depends How good is your (legal) English? For example, do you know the legal difference between "will", "shall" and "must"? Or, the difference between "employee", "subcontractor" and "worker"? Or the difference between "bankruptcy", "insolvency" and an "act of bankruptcy"? Contingency What are you going to put in your dispute resolution clause? Do you prefer mediation, arbitration or litigation? Will it be a one size fits all or will it be escalating? What happens if one of you dies? Or emigrates? Or divorces? Or is convicted of a crime? A financial crime? A violent crime? A sexual crime? Or what if such is just alleged but not proven? What happens if the company ceases to exist? Or is sued? Or is acquired by someone else? Or by one of you? Who is responsible for insuring the subject matter of the contract (if anyone)? To what value? If the person who should doesn't can the other person effect the insurance and claim the premium as a debt due and payable? Not all of these will be relevant to your contract. Familiarity How familiar are you with this sort of contract? Is this something you do all the time or is this a one off? For example, I am happy to enter a construction contract without legal advice because that's my business and has been for many years - I know my risks and how to manage them, inside and outside the contract. However, when I set up shareholder's agreements, wills and business continuation insurance with my partners, we went to a lawyer. What is your relationship with the other person i.e. how much do you know and trust them? Stakes If the contract is not very important (which is something that varies with the participants, for some people a million dollar contract is not important for others a $5 one is), so that if, by screwing up, you are OK if you lose everything you've staked then write it yourself. Alternatively, if the contract is vitally important to you and your heirs and assignees unto the 6th generation, I'd get a lawyer to write it - its pretty cheap insurance. How long the contract lasts will be a factor in this - a contract that exposes you to risk for 3 months is different than one that does so for 25 years. Basically, its a risk reward calculation. TL;DR Contracts only matter when relationships break down. If you reach for the contract then you can expect that the other party will be playing for keeps and that contract is your only defense against the worst they can do. If you are happy with your skills in mitigating against a cashed-up opponent who wants to see you go down no matter the cost then draft it yourself.
Consult a lawyer These issues are quite common and their impact depends on your jurisdiction (usually local governments handle this) and the attitude of your potential lenders/buyers. In most cases, local governments have the power, in extremis, of ordering the demolition of unpermitted work. However, this is normally done only when the work is irredeemably unsafe or adversely affects the amenity of neighbours. More common might be an order to make good any defective work, possibly to current rather than historical codes after which they will retroactively grant the permissions. Some lenders will refuse to lend if there are unpermitted works. Others will only lend against the unimproved land value less the cost of demolition. The same is true of insurers. As for buyers, well, its making you stop and think, isn't it? Common solutions are to make your offer contingent on the current owner cleaning all this up before you close or offering less to cover the risks you are assuming. This may cause you to miss the property but that's the risk you run.
In general, you cannot neither change contracts nor restrict/nullify other people's rights by your acts alone. The people who hired you personally have a contract with you, not with your LLC. So, if someone has a claim against you, then their claim should not be contingent of your LLC going bankrupt or not; they have a right to have their damages restored by you (who was the entity they hired). Otherwise, fraud/liability delinquency would be trivial: get debts on your name and, when the things get difficult, create a shell LLC and let it go bankrupt.
You need absolute written buy in from the landlord. His agreement is with you, not this new person. If the new person stops paying for whatever reason, then landlord is coming after you.