[rockyV]

Basically it's like this. I have (or had) a friend who is working w/ some partners on building a factory in China. One of them has connections w/ a city w/ sea/rail connections who has promised land and infrastructure investment etc. Problem is that my friend and his partners have no money. I had put some money toward setting up an HK LLC and other expenses, for which I was promised and given 1% of the company (100 shares of the co's 10000) and a position in the company. I had also continued to make personal loans to my friend as he was not working at the time (these would often come in "nickel and dime" fashion, and he is not particular good in handling money, spending it if he has it and asking for more later). So given that I was the only one of them with a job, in essence I was the de facto financier. Things started to go badly after I learned my wife was expecting, and told him that I could not lend him any more money. I could sense that he did not take this well and from that point on was determined to get me out of the company should it succeed.

Note the personal aspects are immaterial from a legal standpoint but I've included them to help explain the background.

So as far as I can tell I do own 1% of the company. Now they have reached a tentative agreement with an Australian financier (PFA has been drafted) my friend is stating that since they have found another source of financing for the associated up-front costs and he is willing to put up USD50K for 1% share, that I have a choice to either come up w/ 50K to keep my share OR sell it back to them for USD50K. He did say I could still have the position but of course that is not a sure thing.

Even if I was not assured of their intentions, I would find this laughable as it does not follow any convention of law or business that I can see (well maybe in China, but these are mostly western educated Chinese guys). I think it is generally understood that once I've bought something it's mine.

For all you folks with a business or partnership in HK, I just have a couple of questions

1) Am I missing something in terms of directors able to remove minority shareholders at whim?
2) If I tell them to sod off and sit on my shares, how can they screw me later?

I need to do some more research and calculation on how to value the company and shares AFTER they are able to get the loan from the financier (the financier will own a 50% stake of the factory) but I'm sure 1% will certainly be worth more than 50 thousand USD. Whether that's the best I can get is another matter.

If they are unable by law to pull the rug out from under me I think it will certainly be worth it to get professional advice from an HK business law or venture capital specialist... Which I will do if needed.

I could also use any info on where to look up public business records in HK (maybe the company share distribution is public info?)

Any advice greatly appreicated!

[nina_70]

Honestly, the best advice I can give is consult a lawyer. Your problem is not a simple, especially with the China connection. You need a real, bonified lawyer.

[irock]

If I may take a guess, your plan is trying to find out whether or not your 1% is worth more than $50k USD and try to get 'reimbursed' as much as possible.

I'm no expert by all means... but shouldn't you have someone impartial to assess the total value of the company then multiply that by 1% to get your fair share? Who came up with the $50k anyway?

Lol... I guess this is just too much for the members on this board. Perhaps your question is to find out GE members who are corporate lawyers and let them help you out.

Good luck!

[PDLM]

The obvious thing for them to do would be to pass a resolution issuing themselves millions of shares and diluting your 1% down to 0.0000001%. Small companies here do that sort of thing all the time.

[freeier]

i thought we went thru this once, and the advice was take the money and go. there's nothing much a minor holder can do in such situation.. better to lock it in and forget the whole thing/frenship.

legal stuffs in china is also murky... don't go into something u have no idea of. throwing good money after bad

[JBest]

Are there any documents governing this relationship? This will be the starting point for determining your rights. At the minimum I would expect some kind of Company constitution, for example, Articles of Association, which set out the terms on which the company must be governed - for example how board members are appointed and removed and how and when and in what amount new shares can be issued. In a situation such as yours I would also expect to see a shareholder's agreement which would supplement the Company's constitution and is basically a contract between the various shareholders in the Company again setting out your rights as against each other. I would be surprised if you could be forced to sell your shares (unless of course you have already agreed to it in, for example, the a shareholders agreement mentioned above). However, I am afraid that this is the sort of thing that really requires professional legal advice from someone qualified to give it in this jurisdiction (or the jurisdiction of the relevant company).