I sat in a business rescue planning meeting last week. In that meeting was an extremely experienced team made up of an attorney, an accountant and a business turnaround professional. They all nodded wisely as one of them said: “There is a system. Work with it quietly. Don’t rock the boat. Live happily“.
Don’t fight it, people.
There is a system. It is designed for people much more stupid than you or I. The fact that it goes against common sense, interferes with our own plans and will cost a bit of money, is just noise. This goes for many new bits of legislation which are being thrown at us at present.
Go with the system.
Here is something you may not be aware of: Up until recently your shareholder agreement may have a clause in it to the effect that if there is a clash between the shareholder agreement and the memorandum of incorporation (MOI) of the company, then the shareholder agreement will rule. That was not so nice for the public dealing with your company, who have access to the MOI, but not the shareholder agreement, and it might have meant they were dealing with a different animal to the one they believed they were.
Things have changed with the new companies act. Now the MOI rules. It is in the act and it is a law which cannot be contracted out of. If you just fill in the common or garden variety unsliced government issue MOI, you may wish you had taken some professional advice in the not too distant future. That professional advice allows you to choose now, the destiny of your business to a great extent. For instance, the commonly held understanding is that 25% plus 1 share is needed to block certain resolutions. How would your wealth be affected if you woke up on May 2 to discover that this has been changed unilaterally to 15% + 1?
So get some good advice, and if you haven’t already submitted your MOI then get some first class, professional, specialist guidance on establishing your MOI by going to Douglas Shaw’s web site, and then buying some of his time. There are 50 issues to be considered in completing a MOI, and as always, there are repercussions and unintended consequences to look out for. He lays these out in a series of video tutorials, which make sense to us lay people.
Here is his website: http://www.realmois.com/
Having your MOI under your control is fundamental to the value of your business. Imagine negotiating a deal with a buyer of your business in years to come, only to discover that the terms of your MOI require that you need the sanction of that one minor recalcitrant shareholder, after all. It could mean the end of months of hard work, soul bearing, dreams and retirement.
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