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Case File #37: The Ghost Shareholder
The Registry Ransom
In the early days of his startup, Liam gave 5% of the shares to a cousin who helped with the coding. The cousin moved to the US and hasn't been seen in twenty years. Liam assumed the shares were 'dormant' since the cousin hadn't worked in the business since 2004.
When a private equity firm offered $12M for the company, they required 100% of the shares. The cousin resurfaced, knowing he held the deal hostage. He demanded $1.5M to sign the transfer—far more than his 5% was worth. Liam had to pay the 'ransom' to save the $12M deal. A missing 'Share Transfer' form in 2004 cost Liam $600,000 in pure extortion.
- Clinical Mystery: Why was a long-dead grandfather still blocking a 2024 merger?
- The Human Intent: To keep shares in a 'historic' name to honor the founder, never transferring them to the estate
- The Diagnosis: The Registry Gridlock: You cannot sign for a ghost. If the register isn't updated, the business is paralyzed
