HK Company is a new term for me, unless you mean Hong Kong. However, assuming that the law of the jurisdiction of the corporation is the same as the general law throughout the U.S., the answer is that generally no one can force any shareholder to sell out absent an agreement that permits or requires such a sale or requirement. Anyone with more then half the shares can control the Board and therefore exercise control over the company. However, that goes to governance. Generally absent a statute or an agreement, shareholders cannot be forced to sell even by majority shareholders or the Board.
The control and authority that sharesholders have is based on the terms and conditions of a corpoaration's by-laws, and/or the written agreements between the shareholders. If there are no provisions in the the corporate documents that give the shareholders such rights, they have none. Instead, in most jurisdictions, majority shareholders have fiduciary duty to protect the rights of minority shareholders and can be sued for breach of that duty if the rights of minorty shareholders are taken away.
It is well settled that the law abhors forfieture. Causing a party to lose their rights without there express consent is not a legally acceptable practice in any jurisdiction in the US and most civilized countries.
Phillip M. Smith Jr.
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THESE COMMENTS ARE NOT LEGAL ADVICE. They are provided for informational purposes only. Actual legal advice can only be provided after consultation by an attorney licensed in your jurisdiction. The answer to question does not create an attorney-client relationship or otherwise require further consultation. Mr. Smith is licensed to practice law throughout the state of California with offices in Los Angeles County. He is authorized to handle IRS matters throughout the United States, and is also licensed to practice before the United States Tax Court. His phone number is 323-292-4116 or his email address is [email protected]
The above two answers are good. I will add:
Q: you have stated that the 3 S/Hs hold 39%. What happened to the other 61%? What is a HK company? Yes, 51% generally means control of the day-to-day operations of the corp, but it does not mean absolute control oover everything. Assuming general American laws apply, a shareholder cannot be forced out unless there is a shareholder Agmt or Bylaw that permits it. In the case of abuse or oppression of the minority by the majority S/Hs (a breach of their fiduciary duty in some jurisdictions such as California) or by the Board, the minority shareholder may be able to force a judicial dissolution, which could result in his buying out the majority S/Hs. If the Bylaws provide for cumulative voting in electing the directors, even the 11% shareholder (who is actually a 28.21% shareholder if there is no one besides the three) can elect himself to a board with 3 or more directors authorized, so he can see what the Board is doing. Consult a business lawyer.
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