A Shareholder Has Stopped Responding: Can Your Company Still Make Decisions?

One of your shareholders has stopped replying.

Emails go unanswered, calls are not returned and they are no longer participating in company decisions. But they have not sold their shares or formally left the company.

Meanwhile, the business still needs to operate. There may be contracts to approve, shares to issue, investors coming in or other decisions that need to be made.

So, can everyone else simply move ahead without them?

Sometimes. But a shareholder going silent does not usually mean their rights disappear. Whether the company can still make a decision depends on what needs to be approved, the Companies Act 2006, the Articles of Association, any Shareholders Agreement and the voting or meeting requirements that apply.

Does Someone Stop Being A Shareholder If They Stop Responding?

No. A shareholder does not generally stop being a shareholder simply because they stop communicating with the company.

Their shares and the rights attached to them remain in place unless their ownership is formally changed.

The more useful question is whether the company actually needs their participation for the particular decision it wants to make.

Does The Decision Actually Need Shareholder Approval?

Not every company decision needs to go to the shareholders.

Some matters can be decided by the directors, while others require shareholder approval. The Articles of Association or Shareholders Agreement may also give shareholders approval rights over particular reserved matters or major decisions.

This distinction matters when someone has gone quiet.

If the decision is something the board can validly approve, an unresponsive shareholder may not prevent the company from moving forward at all. If shareholder approval is required, however, the company needs to work out which decision-making process applies.

Do You Still Need To Give Them Notice?

A shareholder going silent does not generally mean the company can simply leave them out of the meeting process.

The Companies Act 2006 contains rules around notice of general meetings, and the Articles should also be checked.

The important distinction is that giving the required notice and getting a shareholder to participate are two different things.

If the company follows the applicable notice requirements and the shareholder still chooses not to engage, the next question is whether the meeting can proceed without them.

What If They Do Not Attend The Meeting?

This is where quorum becomes important.

Quorum is the minimum attendance needed before a general meeting can validly deal with business.

Under the Companies Act 2006, the default position for a company with more than one member is generally that two qualifying persons are needed for quorum, although the Articles may set different rules.

So, before assuming the remaining shareholders can simply hold the meeting without the person who has stopped responding, check the Articles.

If their attendance is needed to establish quorum, the meeting may not be able to proceed in the usual way.

In more difficult cases, the court also has power under section 306 of the Companies Act 2006 to order a meeting where it is impracticable to call or conduct one normally.

Does It Matter How Many Shares They Own?

Yes, although their ownership percentage is only part of the picture.

If an unresponsive shareholder owns 10%, the remaining shareholders may still have enough voting power to approve many decisions.

But the smaller shareholder does not simply disappear from the process. They may still matter for quorum, hold particular class rights or have specific consent rights under the Articles or Shareholders Agreement.

Voting thresholds matter too. An ordinary resolution generally requires a simple majority, while a special resolution requires at least 75%.

This means an absent minority shareholder may have little effect on one decision but become much more important for another.

The position can become especially difficult in a 50/50 company. If one shareholder stops participating, the other may be unable to reach the necessary quorum or voting threshold.

If that starts preventing the company from making decisions, the issue may develop into a shareholder deadlock.

Can You Use A Written Resolution Instead?

Sometimes.

Private companies can generally make eligible shareholder decisions by written resolution instead of holding a meeting.

Unlike the Australian position, an ordinary UK written resolution generally requires a simple majority of the total voting rights of eligible members, while a special written resolution requires at least 75%.

This means an unresponsive minority shareholder may not necessarily stop the company from making the decision.

However, written resolutions cannot be used for every matter. For example, they cannot be used to remove a director under section 168 or an auditor under section 510 of the Companies Act 2006.

If a written resolution looks relevant, the company should check the voting threshold and its governing documents rather than assuming it is an automatic workaround. You can read more about written resolutions in UK companies.

What If They Are Also A Director?

In a small company, the unresponsive shareholder may also be a director.

These are separate roles.

Their absence as a shareholder may affect shareholder resolutions and general meetings, while their absence as a director can separately affect board quorum and board decisions.

This is another reason to identify who actually has authority to make the decision before assuming the company is stuck.

Can You Remove Or Take Back Their Shares?

A shareholder going silent does not generally give the company an automatic right to take their shares away.

If the real issue is removing the shareholder rather than making a decision without them, the Articles and Shareholders Agreement should be checked for transfer, leaver, buyback or other exit mechanisms.

That is a separate issue from simply working out whether the company can continue making decisions while they are unresponsive. You can read more about removing a shareholder from a UK company.

What Should You Do If Their Silence Is Holding Up The Company?

If a shareholder has stopped responding, do not start by asking how to remove them. Start with the decision the company actually needs to make.

Check whether it is a board or shareholder decision, what the Articles of Association and Shareholders Agreement require, and whether the relevant notice, quorum and voting requirements can still be met.

In some cases, particularly where the unresponsive shareholder only holds a smaller percentage, the company may still have a straightforward way to proceed. In others, particularly in a 50/50 company or where the shareholder has special consent rights, their silence can create a genuine roadblock.

If an unresponsive shareholder is starting to hold up important decisions, having your Shareholders Agreement reviewed alongside the Articles can help clarify what the company can still do and what options may be available if the existing process no longer works.

If you’d like to talk through your options, call us on 0808 134 7754 or email team@sprintlaw.co.uk for a free, no-obligations chat.