How to remove a shareholder from my Hong Kong Company ?

[shizui04421]

Hello, i am the company Director and i own 80% of the shareholders, i want to remove the other shareholder which has 20% of the shares, how could i do that ?

Thank you for your help and support.

 

[CyprusLawyer101]

Buy him out

 

[JackAlabama]

shizui04421 said:
Hello, i am the company Director and i own 80% of the shareholders, i want to remove the other shareholder which has 20% of the shares, how could i do that ?

Thank you for your help and support.
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You cannot just remove a shareholder, unlike firing a company director, firing a shareholder is not possible.

The only option is to buy him out, since his shares are likely not liquid he might be willing to accept easily.

 

[Mike Forman]

Buy him out or if you can't come to an agreement open a new HK company to run your business.

You are the main shareholder and director so you still can make all decisions and he cannot/is not allowed to make any decisions or get involved in operations with the minority of his shares

 

[CyprusLawyer101]

Mike Forman said:
Buy him out or if you can't come to an agreement open a new HK company to run your business.

You are the main shareholder and director so you still can make all decisions and he cannot/is not allowed to make any decisions or get involved in operations with the minority of his shares
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Actually , this is not good advice. Please do not act unilaterally, unless you obtain formal legal advice. Minority rights protection is a real thing and diverting the operation is a clear infringement.

 

[DarkRevoMan]

shizui04421 said:
Hello, i am the company Director and i own 80% of the shareholders, i want to remove the other shareholder which has 20% of the shares, how could i do that ?

Thank you for your help and support.
Click to expand...

Next time deal with this in advance. You should have had clauses in your shareholder agreement that deal with this. There are tons of examples like shotgun buybacks, vesting periods with cliffs, etc.

Otherwise just don't pay any dividends from the company, pay yourself a salary or pay expenses to another company you own (there are infinite ways to pull out capital without paying a dividend).

https://en.wikipedia.org/wiki/Shotgun_clause
https://www.nolo.com/legal-encyclopedia/plan-ahead-changes-corporate-ownership-29663.html

 

[Mike Forman]

CyprusLawyer101 said:
Actually , this is not good advice. Please do not act unilaterally, unless you obtain formal legal advice. Minority rights protection is a real thing and diverting the operation is a clear infringement.
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These are options, but definitely depending on the situation and business scope, relationship etc do nothing without proper legal advice.

If there are no clauses that protect the shareholders of opening another business then one has for my understanding always the right to start a new business.

The best option is to come to an agreement for whatever reason you don't want that person to be a shareholder anymore. A document of share transfer can easily be prepared and records changed for a few usd. Any other option legal consultation would be be recommended, there are enough good law firms in Hong Kong that can give you the right advice and options for probably a few thousand usd.