Client forming a limited company. His live-in partner will also become his business partner and active in the company 18 months later (with equal fee earning potential). How should the shareholding best be structured on formation?
Options:
1. Client has 1 share and new share issued when partner joins
2. Client has 2 shares and transfers 1 share when partner joins
3. Client has 1 share and partner has 1 share
Assets will be low and client has no problem with partner having dividends before being active in the business.
Any comments appreciated. Thanks
Graham Kemp
Replies (3)
Please login or register to join the discussion.
follow on
i've set up a company with another person, we each have fully paid-up £100 of £1 shares, as well as loaning money to the company. We now have an employee that we want to become a part investor probably around 5 shares, (about 2.5% ownership).
my balance sheet in brief is
Share Cap £ 200
P&L (£5000)
Total (£4800)
how can i issue the shares, as no distributable profits to cover the nominal cost, so presumably can't issue for nil consideration.
would I have to take £5 off the employee to give them 5 £1 shares?
Also as another question what are the tax implications of the issue?
is it just plain CGT, and how would i work out the initial value?
any help, suggestions appreciated
sorry to tag onto this post, but it seemed sensible as it was in the same area
Paul
Thanks Neil....
...but I was hoping you might be kind enough to help me narrow the choice down, not expand it! Am I worrying about nothing, here?