R K writes: I retired from a private company in 2003 but still own 10% of the shares, which I want to sell.

The shareholders’ agreement says the shares must first be offered to the other directors and if there are no takers they can then be offered to the open market.

I mentioned to the directors that perhaps the company would like to buy back my shares but I was told by another director that it is not possible for companies to buy back shares. Is this correct?

It is quite normal for a private company to have the restriction you mention, writes Chris Lane a partner in Kingston Smith LLP. It enables the existing shareholders to have the first refusal on any shares for sale.

But, as you suggest, it is also possible for a company to buy back its own shares. In this way, all the existing shareholders get a bigger slice of the equity. For this to happen the company’s articles must allow it (they can be changed if they do not) and ideally the company must have distributable profits at least equal to the amount being offered for the shares. This is because the company is required to maintain its capital position.

If the firm does not have enough profits, it would be possible to use its capital, but this would take longer.

If the share buy-back is an option, you will need to agree a price and sign an agreement, which would then need to be approved by the company by special resolution.

The comment from the other director may mean the company does not have enough profits or capital to buy back your shares. If that is the case, you may be faced with the difficult task of trying to persuade an outsider to buy your shares.

INTERVIEW SKILL

J W writes: In the past this column has discussed how to conduct interviews lawfully, but what are the best questions to ask candidates?

It is up to you to control the interview without intimidating the interviewee, writes Peter Done, managing director of Peninsula.

Preparation is important. Write a detailed job description covering the duties, responsibilities and relation- ships involved in the post. You can base many of your questions around the job description.

At interview, welcome the job candidate, put him or her at ease and outline the structure of the interview, informing him or her how long it will last. In the interview ask the individual to elaborate on what he or she has written on the application through open-ended questions. Use statements such as: “Tell me about”; “what do you think about” and “could you describe” to obtain information. Use closed questions (questions that can be answered “yes” or “no”) to clarify points. Outline the role in question, detailing the main terms and conditions and allow the individual to ask questions.

Question any irregularities or areas of concern — for example, gaps in employment and jobs undertaken for a short length of service.

Do not ask discriminatory questions or base selection decisions on discriminatory views — in respect of race, disability, sex, spent convictions, trade-union membership and so on.

Pitfalls to avoid include not dominating the interview or imposing your views on interviewees. Do not ignore their point of view, nor should you interrupt them when they are speaking. Do not allow personal prejudices to influence your decision. More importantly, do not be vague or oversell the position because this could result in misinterpretation of the job. Making interview notes is very important and helps to provide genuine reasons if any applicant is unsuccessful.

If more than one applicant is capable of filling the vacancy, consider calling the applicants back for a second interview.

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