Company formation: 1 share or 2?

Company formation: 1 share or 2?

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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

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By AnonymousUser
21st Apr 2005 23:21

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

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By User deleted
22nd Apr 2005 17:41

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?

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By NeilW
21st Apr 2005 20:50

You missed one.
One share - joint owners.

NeilW

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