"Megacorp B comes along and wants to buy Company A (in its entirety, not allowing the current owners to retain a controlling interest)."
I'm going to pose a frame challenge here, and use that to provide a solution. If the previous owner can compel the new owner not to do something with the company, then that is equivalent to a controlling interest to the extent of that ability to compel. With that in mind, we can call it what it is and tweak the above criterion slightly:
Megacorp B comes along and wants to buy Company A (in its entirety, not allowing the current owners to retain a controlling interest, other than an interest which allows the current owner to control the ethical commitment ).
Now the problem can be resolved by having different share classes in the company:
- Ordinary shares: full rights to dividends, proceeds of winding up, and voting.
- Restricted voting shares: no rights to dividends or proceeds of winding up; restricted voting rights.
The current owner retains an arbitrary number (e.g. 1) of the restricted voting shares; the new owner takes all the ordinary shares. The effect of this is that the new owner receives 100% of the company profits and retains 100% control of the company other than in regards to the ethical commitment.
In the company's articles of association, you insert 4 clauses:
- The ethical commitment (e.g. "The company shall not do X").
- A provision for entrenchment, which provides that amendments to the articles which amend clause 1, 2, or 3, require unanimous agreement of the shareholders' voting rights. See Section 22 of the Companies Act 2006 for how this works, and note that the usual rule in the absence of such a clause is that the articles can be amended by agreement of 75% of the voting rights per Sections 21 and 283 of the Act.
- Definition for the restricted voting share class such that it carries only the right to vote on amendments to the articles which amend clause 1, 2, or 3, but has no voting rights on any other issue and no rights to dividends or capital on winding-up.
- Definition for the ordinary share class such that it carries 1 vote per share on all issues, and equal rights to dividends and capital on winding-up (or whatever other voting/dividend/capital arrangement you want).
Alternatively, you can omit clause 2 and amend clause 3 so that the restricted voting shares have a weighting of at least 25% on any votes to amend clause 1 or 3.
Make sure you comply with the following requirements:
- Section 26: provide Companies House with a copy of the amended articles within 15 days of them taking effect.
- Section 23: if the articles contain provision for entrenchment (clause 2 above), notify Companies House of that fact.
You must use Companies House standard online/paper forms for most such notifications.
Bushell v Faith is authority for the principle that weighted voting share classes are valid, even to the extent that they override statutory voting rules (e.g. the statutory rule that a company director can normally be removed by 50% of the members).
Section 33 of the Companies Act 2006 provides that a company's constitution (i.e. the articles of association) have the same effect as if it were a contract between the companies and its members. Accordingly, if the company breaches the ethical commitment, you can sue it for breach of contract.