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Dissolving Of Partnership In Pte Ltd - Advice Needed

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Dissolving Of Partnership In Pte Ltd - Advice Needed

Postby ck88888 » Wed, 08 Feb 2012 10:58 pm

Dear All,

Been google-ling around for a suitable Spore business forum, and finally decided this is the best given that it is active with prompt and well thought out replies, thus hope that some of the folks here will be able to advise me on the dissolving of partnership in a Pte Ltd.


The background is as follows:
X and myself went into a partnership in the formation of a Pte Ltd registered with 50-50 shares division in ACRA, and providing 2 different area of services in which each of us looked after according to our respective area of expertise. After close to a year of operations, X decided to stop his side of the service given the poor business performance and outlook, and stated his intention in the sales of the portion of his service (thus shares) to interested buyers.

As my side of the business was doing well (and infact had turned profitable), I will still want to carry on with my service at the existing location but therein lies some complications that I hope the forumers here will help me out:

a) Both X and myself had only performed 1 injection of funds during the startup of the business. As we only share one corporate banking account, X side of the losses had been covered up by the money from the side of my business. Thus, if not for my service's good performance, the 2nd injection of funds will have to come in way before his decision to sell his shares.

b) As X had decided to call it quits for his end, he is now seeking for new buyers in which he already declare that he will get all the money from the proceeds of this sale even though his side has been racking up the huge losses and the startup costs (i.e. Reno/Furniture/Equipment) for his service has also been shared by the 2 of us.

c) On my end, I feel that I have been left in the lurch of his decision and that the side of my business that has been helping to sustain his have all been in vain since he is not going to compensate me for it.

d) Also, I might be eventually forced to share my shares as our whole business entity is no longer sustainable for the long term with only my end being profitable but still resulting in monthly deficits as his is continuing to lose money. As such, I might be then forced to sell my end of shares as well since I doubt he will be able to find a buyer to only takeover his service and yet want to continue to work with me as a co-tenant at the same location. The way I see it, our whole business entity can only tempt potential buyers with our location or the good performance from my side of the business as a selling point.

e)
When the new buyer does buy out both our shares, again the money from the sale will be 50-50 as X has already indicated.

Thus in summary, if X were to sell his share, all the money will be his or if both of us were to sell our shares, then it's going to be a 50-50 split. This arrangement is definitely not fair to me since my side has been making money and yet I am set to lose these money earned and even part of my initial investment.

X is now playing hardball and refusing to negotiate with me on the terms of sales in which I am seeking for more compensation rather than a 50-50 split. He constantly mentions 'speak to my lawyer' and reminds me that it is stated as 50-50 share division in ACRA. He refuses to admit that his side has been losing money and that since he initiated this sale, he should bear more of the losses from his end.

Given my current predicament, could any kind soul advise what recourse do I have legally to seek more compensation from the sales of our business or even the sale from just his side of the shares? Or is the 50-50 share division in ACRA the deathblow to my hopes that I can recoup more money from this whole situation? I have been diligently managing the accounts of the entire business and thus the monthly operating costs vs sales performance from each side of the business will be definitely be in my favor.

I understand this is a lengthy post but my intention is to be as clear as I can so that the situation is elaborated sufficiently. Besides this forum, I am actively seeking possible resolutions in real time but as some of the folks here might have experience in this area, thus will really appreciate any inputs on this, many thanks in advance!

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Postby Strong Eagle » Thu, 09 Feb 2012 8:58 am

I'll give you the short answer now, add more later.

Unless you are carrying a "good will" asset on your books, your share value is exactly what is on your balance sheet as net retained assets divided by the number of shares.

The original capital injection doesn't mean much, just sets the number of shares each of you own. Were the company to be shut down, you'd each receive proceeds according to the number of shares you own. Can't get around this.

If you have cash/equipment in the company and are able to withdraw it from the company before any sale, then the value of the shares becomes essentially worthless. This is one way you get your money, assuming you don't need your partner to withdraw money for example.

Your partner is a dreamer if he thinks someone will buy his shares. Any buyer would look at asset value versus share price... but breaking up a private limited with 2 shareholders just to get at asset values would be very tough.

Therefore, a new owner would be looking for investment upside and risk downside. Given that there is friction between you and partner, a new owner would think twice about investing because you are the income producer and are getting screwed. I certainly wouldn't want to buy into a situation like this... you might just walk away.

Company share buy backs are just about impossible. Your only other option is to buy his shares yourself... at some significant discount to book value.

I don't think your position is too bad, based upon what you have written. Your partner has essentially illiquid shares that can't be sold to anyone with common sense. You can gradually drain the company of assets. You can form your own second company and have it contract to this company so that you move cash into your own company. You can never pay a dividend, so owning shares does nothing for your partner.

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Postby ck88888 » Thu, 09 Feb 2012 10:33 am

Hi Strong Eagle, firstly thanks for your prompt reply and advice, please allow me to clarify on some other points based on your reply as shown below:


Strong Eagle wrote:I'll give you the short answer now, add more later.

Unless you are carrying a "good will" asset on your books, your share value is exactly what is on your balance sheet as net retained assets divided by the number of shares.


Please pardon my ignorance, but what is a 'good will' asset on our books? There was never any legal or black & white written/signed agreement on how the Profits & Losses will be covered by the 2 sides of the business entity. The only mention of shares division is in ACRA which X is using to his advantage.


The original capital injection doesn't mean much, just sets the number of shares each of you own. Were the company to be shut down, you'd each receive proceeds according to the number of shares you own. Can't get around this.

So the 50-50 division in ACRA is really the knockout punch for me? There is no legal recourse for me to seek for more compensation based on the facts & figures that my side of the business has been covering up X's losses and sustaining the entire business entity till now? This is really unfair, sigh.

If you have cash/equipment in the company and are able to withdraw it from the company before any sale, then the value of the shares becomes essentially worthless. This is one way you get your money, assuming you don't need your partner to withdraw money for example.

Unfortunately, there is no way for me to remove the existing installations as per your suggestions. As for the cash portion, I can retain all my earnings and not credit these into our shared Business Banking Account but then, the landlord & others will be knocking on our doors at the end of the month for the rental/utilities etc, and in that event, all those costs + penalty will still be born by the 2 of us, though it will be a 50-50 split which is at least fairer to me since my side of the business is supporting >50% of the monthly operating costs. However, will this arrangement get me into trouble cause I will then be knowingly causing the entire business to go into negative cashflow by not crediting my earnings and can X then use this against me and claim compensation?

Your partner is a dreamer if he thinks someone will buy his shares. Any buyer would look at asset value versus share price... but breaking up a private limited with 2 shareholders just to get at asset values would be very tough.

Therefore, a new owner would be looking for investment upside and risk downside. Given that there is friction between you and partner, a new owner would think twice about investing because you are the income producer and are getting screwed. I certainly wouldn't want to buy into a situation like this... you might just walk away.

With regards to the situation you drawn up, I am in fact pretty intent on staying put and being a co-tenant with this new owner. If the monthly common operating costs (rental/utilities etc) are split fairly, my side of the business is already profitable thus it's definitely to my advantage to not walk away. However, with the current lesson learnt, I will definitely want to get legal documents detailing the fair split of operating costs if this new co-tenancy arrangement were to materialize.


Company share buy backs are just about impossible. Your only other option is to buy his shares yourself... at some significant discount to book value.

I don't think your position is too bad, based upon what you have written. Your partner has essentially illiquid shares that can't be sold to anyone with common sense. You can gradually drain the company of assets. You can form your own second company and have it contract to this company so that you move cash into your own company. You can never pay a dividend, so owning shares does nothing for your partner.


Therein lies the problem, I can't drain the company of assets and the only way I can 'protect' myself now is not to credit any more of my side of the business earnings into the shared corporate banking accounts. However, given this scenario, I will be at the losing end again as eventually someone has to pay the bills else we will be forced to go into closure, in which any money returned from the liquidation of our entire business will be 50-50 which is ultimately unfair to my position.

Strong Eagle, really appreciate your time in going through my postings, and I hope my case will also serve as a good reading to all business owners (existing/future) that a partnership is never as cordial as it appears initially when money is thrown into the equation during the dissolving process. Once again, Strong Eagle, I sincerely thank you for your reply and hope to hear more of your insights! Thanks!

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Postby Strong Eagle » Fri, 10 Feb 2012 8:53 pm

"Goodwill" is the difference between the stock price and the actual underlying value of the assets, usually comes into play when a company pays more for another company than its assets are worth. Let's say you pay $20,000 for a $10,000 worth of assets in a company. You record the difference as "goodwill", the estimate that somehow the company is worth more than just its assets. Then goodwill is depreciated over some number of years.

Here is the fact situation about shareholders, not only in Singapore, but virtually everywhere. Unless you have more than one class of stock, then all shareholders must be treated exactly equally. The percentage of total shares that you own reflects the percentage of your claim on the total assets of the company. He owns 50 percent of the shares, he is entitled to 50 percent of the assets, should the company be wound up.

Similarly, shareholders of the same class of stock must receive dividends, when issued, in proportion to their holdings. You cannot declare that one shareholder will receive less per share than another.

In the absence of business agreements regarding how profits and losses would be handled in each segment of the business, you have no recourse. You have simply screwed up by selecting a bad business opportunity... doesn't matter if it is the other shareholder's business or not... as a whole, the company engages in two lines of business, one good, one bad. You and your partner share all aspects of the company, based upon your ownership percentages, including the shit business line.

But again, unless he can sell the shares to a third party, he can get nothing out of the company. Any third party would have to be out of their mind to purchase shares in an illiquid two shareholder private limited without performing due diligence. I could see a conversation something like this.

Buyer: I am think about purchasing your partner's shares and owning fifty percent of the company as a non-active investor.

You: Well, why not? My partner has been totally inactive for the last few years, a loss maker, actually, so I won't even notice the difference.

Buyer: You sound bitter.

You: I am bitter. I built this company from zero to what it is today, while the f*cker you are dealing with did nothing. Now, he is trying to f*ck me by trying to sell his shares at a premium to you, instead of doing the right thing and selling them to me at a price that reflects our relative contributions. Did I mention that he can go f*ck himself?

Buyer: My hopes were that I will be able to participate in the profit stream based on my investment.

You: Look, Sherlock... I don't want and I don't need your investment. I'll be damned if you are going to take half my earnings because my partner is f*cking me over. You invest, and here is what I am going to do. I will piss in every jar of lemonade we make. I will drop a turd in your Christmas punchbowl. I will extract every penny I can in expenses, fees, salary, and anything short of highway robbery... and maybe that, too. I will run this company into the ground before I share the fruits of my labor with you.

Buyer: Hmmm, I'm thinking that I might not realize a decent return.

You: No, no... come on in... what could go wrong? I'll give you a set of books that look like they were cooked over an open fire.

Buyer: Let me get back to you.

Get it? You have a partner that does nothing now... and you can effectively keep him from selling to anybody... except maybe at three cents on the dollar.

Companies in Singapore are generally prohibited from buying back shares... a very difficult deal to do, and subject to restrictions. So effectively, he can hold the shares but so long as dividends are never issued, his shares are essentially worthless.

If you could prove up intentional fraud on his part, you could take him to court, alleging that his entire purpose was to screw you out of cash. I don't know the details... you decide... and of course, you have to employ the ferkin lawyers.

If I were in this situation, I'd tell my partner to f*ck off, that I would thwart every effort to sell to a third party, that I will do all I can to diminish the profits, that I will do everything to move my business elsewhere, and that I will drive the company into the ground before I'd let him profit from it.

Then, I'd offer him a fractional price to go away... you did screw up you know by putting yourself in this position... he gets something to go away.

He has no recourse. He can't force anyone to buy his shares. He can't force you to be nice to a potential investor. You really have the upper hand.

Company law: http://www.singaporelaw.sg/content/CompanyLaw.html

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Postby Mi Amigo » Sat, 11 Feb 2012 9:49 am

Respect @ SE, a very informative post.
Be careful what you wish for

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Postby Strong Eagle » Sun, 12 Feb 2012 1:45 pm

A bit more information on share transfers..

Usually, the Singapore corporation's Articles of Association will specify any restrictions on the transfer of shares.

The most common forms of restrictions are as follows:

All share transfers must be approved by the Board of Directors by passing a board resolution at a board meeting.

A preemption clause is often included in the Articles, stating that any member who intends to sell any shares must first offer them to the present members.

The transfer of preference or ordinary shares shares by way of gift, by sale or by asset distribution means attracts stamp duty in Singapore.

The Stamp Duty rate is 0.2% of the Consideration or Net Asset Value, whichever results in a higher amount.

Generally the procedure for transfer of shares is as follows:

Check the Articles of the corporation for rules on share transfers. Ensure that preemption rights (if any) have been fulfilled or waived.

Ensure that the transfer documents are signed by the transferor and transferee.

Present the transfer documents and relevant share certificates to the corporation.

Pass a board resolution approving the share transfer.

Present the documents for stamping and pay the stamp duty.
Update registers as appropriate.

Cancel old share certificates and issue new ones.


So again... you should check your AofI - and your partner isn't going to be able to sell without your permission.

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Postby ck88888 » Sun, 12 Feb 2012 3:15 pm

Thanks Strong Eagle, you are really the man! As of now, given the possible scenarios, it appears likely that the only way out of this predicament for my partner and me is for him to sell his sales over to me.

And for that, your most recent post could not have come at a better time, certainly informative and assuring! Thanks so much for your assistance!

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Postby ck88888 » Wed, 22 Feb 2012 9:10 pm

Hi Strong Eagle,

Sorry for troubling you again on my situation, but really appreciate your valuable advice on this.

My partner is now 'threatening' me by saying he is going to a lawyer to do whats fair for us both with regards to our business. My last agreement with him was that the decision was given for him to sell his half of the business: but of cause with a lot of Terms & Conditions so that the new buyer that takes over his half of the business will be independent from mine, ie. we will continue to run the 2 services under the same company name, but our accounts (Profits & Losses) etc will be independent to each of our service. And this time round, the agreement will be represented by legal documents in which the legal costs are borne by the new buyer.

That was my last agreement with him, and he mention he will proceed with the withdrawal of his shares from our partnership. Today, when I queried him on the progress of a new buyer, his reply was that he has gone to the lawyers to do what is fair for the both of us? Thus, do you have any idea what exactly can a laywer do for him that is beneficial to him only?

From his tone, it appears like he sounds confident that this arrangement (through his lawyer) is set to favour him. I will assume that what the lawyer will probably do is to appraise our business in it's entirety (ie. his side and mine) and come out with a figure in which 50% of that figure will represent his shares with which he will then proceed to sell to me or another buyer? However, this is the very thing that I am trying to stop him from doing, which is trying to base the price tag of our business with my side as the main selling point for the good valuation price. Can I also just confirm with you further that, any new buyer will need to have my signature on the dotted line before he can takeover any shares and before I sign, I can lay down all the Terms & Conditions of the partnership with him. If this is the case, I can at least feel more relieved that I am able to block what my partner is doing behind my back without my knowledge!

Moving on, iIs it true then that my only recourse now is to start another business entity and transfer all my services (ie. assets) over to this new company and leave my current business with him as an empty shell? In this way, any valuation of the current business won't be good since my end of the service will be essentially worthless after I do the transfer! It seems this is the only way for me to limit him with walking away from this partnership with more than what he deserves. The only reason why I am hesistant to walk down this path is that the transfer will cause a lot of disruptions to the side of my business and also incur additional costs (deposit, laywer fees, renovation etc). Thus, if you may, please kindly advice which is the best route for me at this stage?

Lastly, it seems that I should also engage a lawyer to workout a gameplan for me and thus I will like to seek your assistance again if you have any good (affordable) lawyers to recommend? Also, I tried to PM you but am unable to do so as I have not clocked up sufficient posts. Thus, if you think its better to take this offline, please kindly PM me if you deem necessary.

Thanks so much for your assistance, I understand you have no obligations in helping 'strangers' like me out and the only way I can repay you is through words represented in this forum, but I really sincerely thank you from the bottom of my heart!

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Postby Strong Eagle » Wed, 29 Feb 2012 8:36 pm

ck88888 wrote:Hi Strong Eagle,

Sorry for troubling you again on my situation, but really appreciate your valuable advice on this.


I've been real busy. First, let me say:

a) I am not a lawyer
b) I have no idea what your articles of incorporation say
c) I have no idea of what your shareholding percentages are

1) If you do not hold at least 50 percent of the shares you are f*cked.
2) If he does not hold at least 50 percent of the shares, he is f*cked.
3) If you each hold 50 percent of the shares you have a stalemate and you can prevail

Do your AoI require approval before shares can be sold? If yes, and you are 2) or 3) above, your partner is f*cked because he can never sell the shares without your approval.

Otherwise, see below... except if you are 1) above... then you are f*cked.

My partner is now 'threatening' me by saying he is going to a lawyer to do whats fair for us both with regards to our business. My last agreement with him was that the decision was given for him to sell his half of the business: but of cause with a lot of Terms & Conditions so that the new buyer that takes over his half of the business will be independent from mine, ie. we will continue to run the 2 services under the same company name, but our accounts (Profits & Losses) etc will be independent to each of our service. And this time round, the agreement will be represented by legal documents in which the legal costs are borne by the new buyer.

That was my last agreement with him, and he mention he will proceed with the withdrawal of his shares from our partnership. Today, when I queried him on the progress of a new buyer, his reply was that he has gone to the lawyers to do what is fair for the both of us? Thus, do you have any idea what exactly can a laywer do for him that is beneficial to him only?


Look, there are three ways you can get money out of a private limited (and I am assuming you have a private limited, even though you referred to a partnership). If not a pte ltd, you can stop reading now, because I don't know anything about LLP's.

a) You pay yourself a salary out of the net profits of, or loans to, the company. Salaries are usually set by the managing director. Are you the managing director? If yes, you can set salaries, if partner is managing director, you have a problem.

b) You can pay dividends from net profits. This requires shareholder approval at an AGM or EGM. If you don't own more than 50 percent, you'll never get this to pass.

c) You can receive directors fees, but these must also be approved at an AGM or EGM... same problem as b).

The buyer is buying X percent of the shares. He will get X percent of the dividends. He will get X percent of the assets at wind up. No agreement can change this.

Therefore, any agreement must revolve around fees and salaries. But here's the beauty part... the new buyer can negotiate all day long with your partner but it doesn't mean sh*t because the moment he sells, any agreements he reached with the buyer don't mean anything. ALL your partner can do is sell shares. He cannot sign a contract that affects you without your agreement.

Therefore, if the buyer wants to negotiate with anyone about division of profits... which means who gets paid what... it has to be with you.

Finally, this "withdrawal of shares" is nonsense. Shares in a pte ltd exist until purchased back by the company... something that is hard to do... and guess what... requires a majority.

From his tone, it appears like he sounds confident that this arrangement (through his lawyer) is set to favour him. I will assume that what the lawyer will probably do is to appraise our business in it's entirety (ie. his side and mine) and come out with a figure in which 50% of that figure will represent his shares with which he will then proceed to sell to me or another buyer? However, this is the very thing that I am trying to stop him from doing, which is trying to base the price tag of our business with my side as the main selling point for the good valuation price. Can I also just confirm with you further that, any new buyer will need to have my signature on the dotted line before he can takeover any shares and before I sign, I can lay down all the Terms & Conditions of the partnership with him. If this is the case, I can at least feel more relieved that I am able to block what my partner is doing behind my back without my knowledge!


If your AoI contain director or shareholder approval of share sales, you are absolutely in command. No sale can be made without your consent.

If you are 50/50 and no AoI share sale paragraphs are present, he can sell but again, the buyer has to be an idiot if he is negotiating terms and conditions with the seller of shares... all your partner can do is sell shares in the company... and the buyer becomes ONLY a shareholder... nothing more. Your partner cannot sign an agreement that the buyer will become a director or managing director or receive a salary without your approval... that requires a majority vote of the board to add a new director.

See, the moment your partner sells his shares, he loses all his titles. The buyer receives no titles other than shareholder, unless you consent otherwise and vote with him at an AGM or EGM to give him a title like director. 50 percent of the shares is not enough for the buyer to force himself onto the board. He is a powerless shareholder... cannot vote you out as managing director.

Moving on, iIs it true then that my only recourse now is to start another business entity and transfer all my services (ie. assets) over to this new company and leave my current business with him as an empty shell? In this way, any valuation of the current business won't be good since my end of the service will be essentially worthless after I do the transfer! It seems this is the only way for me to limit him with walking away from this partnership with more than what he deserves. The only reason why I am hesistant to walk down this path is that the transfer will cause a lot of disruptions to the side of my business and also incur additional costs (deposit, laywer fees, renovation etc). Thus, if you may, please kindly advice which is the best route for me at this stage?

Lastly, it seems that I should also engage a lawyer to workout a gameplan for me and thus I will like to seek your assistance again if you have any good (affordable) lawyers to recommend? Also, I tried to PM you but am unable to do so as I have not clocked up sufficient posts. Thus, if you think its better to take this offline, please kindly PM me if you deem necessary.

Thanks so much for your assistance, I understand you have no obligations in helping 'strangers' like me out and the only way I can repay you is through words represented in this forum, but I really sincerely thank you from the bottom of my heart!


No problem. Look, you have to remember, the guy is not buying a business... like a sole proprietorship... he is buying shares in a business... and this is a very great distinction. He does not become a manager. He does not become a director. He becomes a shareholder. Unless he has more than 50 percent of the shares he can never prevail in an AGM or EGM to be appointed, hired, or anything... he is a shareholder that doesn't have enough votes.

Years ago, I had a corporation in the US. My employees kept clamoring for shares. I said... OK, you can have shares... only I will still keep 60 percent of the voting stock, the stock is illiquid, and will only sell if I say we sell. What are you going to get out of it?

I'd say the same thing about the buyer... an idiot if he buys... he cannot force you to declare a dividend, he cannot force you to employ him, and he cannot force you to make him a director... because he doesn't have majority vote.

Your partner sounds like a big dog on a six foot chain while you are standing eight feet away. He can bark his ass off but can't do much more. Explain to him the new buyer only gets to be a shareholder and you will never consent to vote for anything more.

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Postby ck88888 » Thu, 01 Mar 2012 10:28 pm

Hi Strong Eagle, a BIG thank you for your excellent reply! Please see below for my humble inputs:


Strong Eagle wrote:
I've been real busy. First, let me say:

a) I am not a lawyer
b) I have no idea what your articles of incorporation say
c) I have no idea of what your shareholding percentages are

1) If you do not hold at least 50 percent of the shares you are f*cked.
2) If he does not hold at least 50 percent of the shares, he is f*cked.
3) If you each hold 50 percent of the shares you have a stalemate and you can prevail

Do your AoI require approval before shares can be sold? If yes, and you are 2) or 3) above, your partner is f*cked because he can never sell the shares without your approval.



We hold a 50-50 shares division and both of us are listed as directors (besides shareholders) in the company. On top of that, I was also appointed as the company secretary and managing director (not sure if these actually allocates me any addition powers).

Looked through my Memorandum & Articles Of Association, and I guess the only relevant portion will be the section which says "Transfer Of Shares" which I have reproduced an important excerpt as shown below:

**The directors may decline to register any transfer of shares, not being fully paid shares to a person of whom they do not approve and may also decline to register any transfer of shares on which the company has a lien.**


Thus, based on the above, I guess what you have mention still holds true for my case as he can never sell/transfer his shares without my approval as well!

Look, there are three ways you can get money out of a private limited (and I am assuming you have a private limited, even though you referred to a partnership). If not a pte ltd, you can stop reading now, because I don't know anything about LLP's.



Yes, our business was registered as a Pte Ltd (Limited Exempt Pte Company)!

Finally, this "withdrawal of shares" is nonsense. Shares in a pte ltd exist until purchased back by the company... something that is hard to do... and guess what... requires a majority.

If your AoI contain director or shareholder approval of share sales, you are absolutely in command. No sale can be made without your consent.

If you are 50/50 and no AoI share sale paragraphs are present, he can sell but again, the buyer has to be an idiot if he is negotiating terms and conditions with the seller of shares... all your partner can do is sell shares in the company... and the buyer becomes ONLY a shareholder... nothing more. Your partner cannot sign an agreement that the buyer will become a director or managing director or receive a salary without your approval... that requires a majority vote of the board to add a new director.


Didn't manage to find anything related to the 'Share Sales' in our AoI, so I guess my partner has the right to sell, but really as you mentioned, the new buyer has to be completely bonkers to buy into something that he has absolutely no powers to command.

Based on your sound advice, I guess the only way out of the predicament for my partner is to sell his shares back to the company (since no one will possibly buy his shares) and I guess the value of his shares can only be based on the current asset value of our business (i.e. furniture/equipment etc) as the business is losing money when considered in its totality (and is thus essentially worthless). Will be paying a visit to the law firm soon to sort this out and can then refocus my energy back on my side of the business!!!

Once again, Strong Eagle, really thanks for your help rendered and if your time permits, I really owe you a drink for all your valuable inputs! Do PM me if you should be interested in such a meetup then! Cheers!

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Postby Strong Eagle » Mon, 05 Mar 2012 1:34 pm

He could also sell them back to you. The share price can be whatever you agree it will be... it does not have to be linked to actual asset values or income streams.

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Postby Strong Eagle » Mon, 16 Apr 2012 12:15 pm

Any updates?

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Postby ck88888 » Mon, 28 May 2012 5:43 pm

Strong Eagle wrote:Any updates?


Hi SE,

Apologies for me MIA for some time, had been a hectic last few months and it seems to only get better, will get to that later and also, might require your expert advice at the same time!

As you have mentioned, the ball should be in my court since my partner's side of the business ain't performing and he is also unable to sell it off to a 3rd party as well. However, for my case, as the shares (ie controlling rights) are split 50-50, thus, it was effectively a stalemate for the 2 of us as he was effectively dragging the entire business on, without a care in this world for how the monthly operating costs will be paid before we reached a resolution! I made several offers to buy his shares which were all turned down even though it made monetary sense to him and was the best way out for him.

Eventually, I had to consult 2 different lawyers to seek the best way out, and finally, the only agreement we could reached was to wind up the business. Thereafter, we engaged a 3rd party to perform the winding up but it was also good that this management firm also stepped in as a mediator and we could eventually arrive at a price that he agreed to sell his shares to me. Well, not after months of torture & time/money wasted! Best part, the final settlement tabled to him is not far off from what I last offered him before the 'mediator' stepped in.

Throughout this whole episode, I learned the following:

1) Choose your partners wisely. If you can afford to strike out on your own, skip the partnership I say.

2) Carefully draft out an agreement that is legally recognized and signed by all partners before embarking on the business. In the beginning, all relationships are cordial, but when things get nasty, it really does which I have the misfortune of finding out.

3) Ensure your MAA is written clearly, especially for the exit strategy. For my case, there was no reference of the way to quantify the share value should some shareholder decide to quit/resign/buyover. Thus, from the laywer's mouth, my partner can quote me any price he likes, and he is not technically wrong.

That said, I have been through the worst of how a partnership in a Pte Ltd can go wrong, and if any forumers here need my 'advice' or is stuck in a sticky situation like I was, I will be most happy to share with your my experience and contacts.

Now, back to the part 'where things get better' even after I have bought over the shares. After going through the accounts and digging deep, I have discovered that there was some funds and property of the company that my ex-partner has taken into his own pockets and kept for his own benefit.

Our agreement signed was only for the buying over of shares, the nitty gritty like misappropriation of petty cash and property of the company was not included. I thus approached my partner demanding for the monies and property back but he has refused and have stated all these are covered under the agreement we signed for the buying over of shares.

I am now stuck once again. Instead of concentrating and growing my business, I have to contend with this ex-partner (from hell) who shows up again to play hardball. Thus Strong Eagle,

Is it true that he is not liable for any criminal prosecution for the misappropriation of petty cash and property of the company? Please note that this occurred when he was still a director/shareholder of the company! It does not mean that now that he has resigned from his company, he is effectively no longer responsible for his past actions right!

I understand that what I am chasing him for is actually minor in terms of monetary sense, but what this person is doing to me now is like coming to my front yard and taking a dump and saying ' So what can you do to me'! I wish I could post our exchanges for all to see what kind of lowlife this person is! Thus, I am quite determined to get him for what it is worth.

I have approached the mediator, who asked me to let the case go because the money involved is not great but to me it is the principle involved! My next step is to go lodge a police report as I want to document this down in black/white so that if I ever have the extra time/money one day, at least this issue is documented down!

Strong Eagle, you got any better advice?

dnlei
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Postby dnlei » Sat, 16 Jun 2012 1:33 am

hi guys, i am of similar situation with ck.

i am a sleeping partner in a pte ltd with a partner and general partner went missing last few years. Finally made up my mind to totally put this sh*t away by ceasing the company.

@ck: i understand you approached 2 lawyers which come to a solution to wind up, what would be the est. legal fee expected for such service?
i sent my story to my cousin's legal firm and she told me it would cost 20K which is totally exceeded way off what my paid-up capital and my remaining cash balance in the corporate bank account.

@all: assuming if i just wan to break free from the company and striking my name from the registrar and can forgo any cash balance in the corporate bank account. Anyone know of the range for legal fee for handling such situations?

many thanks in advance.

ck88888
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Postby ck88888 » Mon, 18 Jun 2012 11:05 am

dnlei wrote:hi guys, i am of similar situation with ck.

i am a sleeping partner in a pte ltd with a partner and general partner went missing last few years. Finally made up my mind to totally put this sh*t away by ceasing the company.

@ck: i understand you approached 2 lawyers which come to a solution to wind up, what would be the est. legal fee expected for such service?
i sent my story to my cousin's legal firm and she told me it would cost 20K which is totally exceeded way off what my paid-up capital and my remaining cash balance in the corporate bank account.

@all: assuming if i just wan to break free from the company and striking my name from the registrar and can forgo any cash balance in the corporate bank account. Anyone know of the range for legal fee for handling such situations?

many thanks in advance.


Hi dnlei,

Sorry to hear of your predicament. The resident expert in this forum is Stong Eagle but I will be happy to share what I know:

The lawyers I went to were basically for consultation on the approaches that I could undertake. If they were to take over my case then, for any business entity, it will only go to the high courts and the charges ranges from 20-30K easily which is money down the drain really, more so in your case since you just want to cease the existence of this Pte Ltd.

In your case to cease the company, you can opt to do a winding up or a striking off to get struck off ACRA's records.

For winding up, there are a few types namely, Compulsory winding up (where your creditor will file to the high courts to have your company wound up to recover whatever monies that they can, unlikely in your case), members voluntary winding up (where the shareholders initiate the winding up themselves) and creditors voluntary winding up (where the shareholders know that the company is insolvent but decide to wind up the company voluntarily as liquidation of their assets will assist to pay back the debts owing to the creditors). Hope I remembered the above correctly.

For a simpler and costs effective method, you may opt for a striking off instead. A company can be struck off once it is in a state of no net assets and liabilities. Thus, you will require your books to be balanced etc before filing to ACRA. I believe for your case, this is the most costs efficient approach. Of course, I believe to initiate this proceedings, you will need to call a AGM and have a 75% vote in favour of this motion thus you will need to consider the shareholding allocation in your company to achieve this especially if your partner is MIA.

To get your name off the registrar for this company, you will be required to resign from the company and some official documents will need to be signed and endorsed by all shareholders/directors of the company I believe. Since your partner has been MIA, I m not sure how you intend to resolve this. You can feed us more info for us to advise you further.

Hope the above can aid you in your decision making.


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