CGOV.12:5 - Archetypal Grounding

CGOV.12:5.1 - A capital issue omits the choice owed to a holder

In this constructed company, all 100 existing shares have the same relevant rights. Nira owns 10. The company proposes 30 new shares at 4 each. The supplied instrument gives every existing holder a proportional offer, ten working days of usable notice to elect, and payment before issuance. The company has no power to waive another holder’s right. No general buyout right is supplied.

The proposed allocation gives all 30 new shares to the controller. Nira received no offer. Her affected right concerns the opportunity to buy 3 of the new shares for 12; her existing 10 shares do not by themselves entitle her to block all financing.

Provide the required offer and exercise period under the supplied rule before allocating her portion elsewhere. If she elects, pays and receives the 3 shares while all 30 are issued, she holds 13 of 130, retaining 10%. If she does not take up the offer and the 30 shares are validly issued to others, her 10 of 130 represent about 7.69%. The latter arithmetic alone does not establish a rights violation.

Suppose Nira submits a valid election but has not yet paid. The result is the election, with payment and issuance still outstanding. Reporting her as already owning 13 shares would erase the unperformed conditions. If she cannot fund 12, the restored opportunity remains real but does not supply the money; she must compare her available choices.

CGOV.12:5.2 - An exit right names a different obligated buyer

A supplied shareholder agreement gives Ivo a right, after a specified change of control, to require the controller to buy his shares. It requires notice within thirty days, uses a stated pricing formula and makes payment precede registration of the transfer. The trigger has occurred; no company repurchase right is supplied.

Ivo identifies the controller as the obligated buyer and sends the required notice in time. That preserves and exercises the contractual demand under the supplied terms. It does not establish receipt of the price or completed transfer, and sending an invoice to the company would address the wrong participant.

If the controller disputes the trigger or price, use the agreement’s dispute route and the needed specialist contribution. Preserve the exercised right and unresolved question without claiming that the dispute itself completes the exit.