Company Law and Tax aspects

Company Law and Tax aspects

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I have a limited company client. The limited company has been in business for about a year now. The first year's account show:

  • Loss £200k
  • Directors Loan £500k (each director £250k loan)
  • Each director owns £1 Ordinary share.
  • Till the date of the resigning director (see below) the company has made a loss

The directors have come to an agreement that one director should move on. He has now resigned as a director. Part of the loan of the resigning director will be taken as stock. The rest of the loan will be paid by the company over a period of time. This has been agreed in writing by the directors.

I need help on company law and tax aspects on this client. My questions:

  1. The resigning director wants to give up his share of £1. Should he just give his share to the remaining director? What is the procedure for this?
  2. Bearing in mind the company has made a loss am I right in thinking they would be no tax implications on the shares being passed to the remaining director?
  3. The value of stock taken by the resigning director, should be at arms length value or lower of cost and NRV.

If I have missed out anything please let me know.

Thanks

Replies (1)

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By petersaxton
09th Nov 2011 12:15

Answers

1 I think transferring is best - see http://www.companyregistrations.co.uk/transfer-of-shares.aspx

2 I agree

3 Arms length value

Thanks (1)