Page 174 - The Circle of Life

after six months or even a year. He is also kept on as advisor to ensure smooth

operations.

Obviously restraints of trade are enforceable but remember there are many legal

problems with a restraint of trade. It must be fair to the restrained as well.

Never accept a minority shareholding option unless you want to lose
your money

The one thing you should never do is to accept a minority shareholding position
in your investment. Experience tells me that it is a scam or it could be. This is

how it works. You invest in a company and obtain a minority shareholding for
your money and in fact the shares are legally transferred to you by the auditors

and you are part of the company.

You expect and are promised (of course) that the profits will be split in a certain
way. And they will show you genuine accounting showing genuine profits over

the last year or two. But Sir, there will be no profits for you as the company will
be run into the red all the time.

How do they do that?

Easy, they draw excellent salaries for “management fees." Then they buy new
cars or infrastructure for own use (since they live here and you don’t they need

it and not you) with whatever profit remains so that there is nothing left to share
with you. So what did you in effect achieve? Nothing which will bring you the

return on investment promised to you! You gave your money to people to play
with interest free and how will you recover your investment? By selling your

shareholding?

Who will buy it?

Your investment partners at a ridiculously low price probably. Then they look for

the next Victim. Just by looking at the history of the sale of shares alarm bells
can go off. It is the oldest scam in the book. You have almost no legal rights

which are enforceable as a minority shareholder in real life despite the rumours
to the contrary. It is financial suicide unless it is a listed company which is more

173