Companies Act 2006 sect 979 and the Royal Mail free shares

[stephen500]

"14th Sept 2013
Dear Stephen Mosley MP,

The government has given notice to float Royal Mail on the London Stock exchange.
It has, as you know, promised the eligible employees a 10% stake in the business.
However after the issue of shares whether the employee is liable to tax, national insurance is subject to certain conditions.
One of those (page 22 “Guide to the Royal Mail Employee share offers: the free shares offer and the employee priority offer”) is that to avoid tax and national insurance the employee must retain the shares for five years.
I have a concern about this and would be grateful if you could raise it with Michael Fallon MP, Minister of State for Business and Enterprise.
Under the Companies Act 2006, section 979 if an individual or another company acquires 90% of the shares of Royal Mail, then that person or company has the right to right to compulsorily buy out the remaining shareholders.
In other words if this happens before the five years is up then under this Act the employees and Royal Mail are powerless the prevent the compulsorily purchase of their shares.
This would result in the compulsorily sale of those shares being liable to tax and national insurance.
Please could you ask Michael Fallon MP to make urgent enquires and if correct does the government have any plans to amend The Companies Act 2006 to ensure eligible employees are not disadvantaged."
This came to my mind after remembering that the shares I had in Manchester United were compulsory purchased after the Glaziers had scooped up 90% of shares!
see this story to confirm this: http://news.bbc.co.uk/1/hi/business/4540939.stm
"If he can get 90% plus one share, he can make a compulsory purchase and scoop up the other 10% of the club's shares."
I have also made Gary Redmond (Royal Mail HQ),Billy Hayes and Dave Ward aware of this.
I await my MP's reply.

[UnhappyGremlin]

Interesting point stephen500.
Let us know what the response is please.

[stephen500]

Interesting point stephen500.
Let us know what the response is please.

Remember this may be unlikey to ever happen, but it may throw a spanner in the works!

[UnhappyGremlin]

Interesting point stephen500.
Let us know what the response is please.

Remember this may be unlikey to ever happen, but it may throw a spanner in the works!

But I wonder if this is something they haven't considered?
There may also be something already in statute to deal with this.
Be an interesting response.

[stephen500]

Interesting point stephen500.
Let us know what the response is please.

Remember this may be unlikey to ever happen, but it may throw a spanner in the works!

But I wonder if this is something they haven't considered?
There may also be something already in statute to deal with this.
Be an interesting response.

I only thought of it as the Glaziers did it to me by forcing me to sell my Man Utd share to them.

[stephen500]

Interesting point stephen500.
Let us know what the response is please.

Remember this may be unlikey to ever happen, but it may throw a spanner in the works!

But I wonder if this is something they haven't considered?
There may also be something already in statute to deal with this.
Be an interesting response.

http://www.legislation.gov.uk/ukpga/2006/46/section/979" onclick="window.open(this.href);return false;
"(4)If the offeror has, by virtue of acceptances of the offer, acquired or unconditionally contracted to acquire—
(a)not less than 90% in value of the shares of any class to which the offer relates, and
(b)in a case where the shares of that class are voting shares, not less than 90% of the voting rights carried by those shares,he may give notice to the holder of any shares of that class to which the offer relates which the offeror has not acquired or unconditionally contracted to acquire that he desires to acquire those shares."

[RobertT]

You've made a good point Stephen, but as the government are still keeping a minority stake and many of the shares will be purchased by pension fund managers, etc who will be tempted by the attractive dividend (in percentage terms) and will therefore see them as a long term thing, the chances of any one company having 90% of the shares is I suspect, a long way off.
The biggest question mark in my opinion, is what future governments decide to do with their remaining stake.

[stephen500]

You've made a good point Stephen, but as the government are still keeping a minority stake and many of the shares will be purchased by pension fund managers, etc who will be tempted by the attractive dividend (in percentage terms) and will therefore see them as a long term thing, the chances of any one company having 90% of the shares is I suspect, a long way off.
The biggest question mark in my opinion, is what future governments decide to do with their remaining stake.

The less the Tories sell off the easier it will be for Labour to take back.
Company valued at 3bn. say only 41% sold and 10% to us.
That would cost Labour at float price £1.23 bn to buy back 41%
They could then either convert the employee shares to a bonus scheme or buy them back at £0.3 bn.
Total cost to taxpayer £1.53bn pounds.
Labour government then takes £100 million per year for 25 years, getting all it's money back!
Simple.