• Share holding and powers

Hello Team,

I have a query regarding a new private limited company for which I am going to be a part of. Initially it was agreed that that there will be two directors with 5000 shares each, so in total 10000 shares. Now due to some hitch other director has got his father involved and now my share holding is 5000 and theirs is 2500 each.

1. Now my question is since this father and son are in majority what all problems can I have due to this in the future when the company becomes successful.

2. How to finalize the monthly drawing figure or salary?

3. What happens to the profit which is not withdrawn and ploughed back into the business.

I would really appreciate your help.
Asked 4 years ago in Business Law from Bangalore, Karnataka
Hi, Technically you have 50% share holding. So eventhough other side has 2 members, their share holding is equal to your share holding. Going forward ensure that votes as per share holding will be method of election rather than head count . So need to amend your Memorandum and articles if this clause is not already  incorporated.  Monthly remenuration is payable only for whole time director or managing director who is engaged full time(6 days a week,45 hours a week) in the company. No remuneration is payable to directors who are not engaged full time. So board of directors (other than the person receiving remuneration)should pass resolution fixing up salary, bonuses and benefits . The resolution should be signed by the remaining board of directors and registered with MCA. 
Profits not withdrawn and ploughed back will reflect in the books of accounts as reserves and surplus. Profits paid to directors(if not ploughed back) to be declared as dividends only. 
Rajgopalan Sripathi
Advocate, Hyderabad
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