A company has 2 directors. One is working in the company the other is retired and has not worked for the company for several years. The retired director wants to sell his shares either to the other director or back to the company. Net value of company is 70k mostly cash/debtors and no dividends have been paid for the last few years so it is almost all distributable profits. What is the best way of paying off the director? I am thinking that paying half of the value out as dividends would give the first director funds to buy back the shares at reduced value othewise he would have to find 35k and the cash is available in the company. Would this then split the amount received by the exiting director into dividend income and then capital gain. Any tips would be appeciated. Also I know goodwill is very subjective but would anybody recommend that an allowance be added considering the exiting director has not been involved in the running of the company for the last few years?
18th May 2012 11:27