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:
- 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?
- 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?
- 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)
Please login or register to join the discussion.
Answers
1 I think transferring is best - see http://www.companyregistrations.co.uk/transfer-of-shares.aspx
2 I agree
3 Arms length value