Hi
Five directors/shareholders each with a 20% stake. One director is leaving and will hand back his shares to the company - no buy back or money paid. How does this need dealing with? Obviously companies house will be informed, but does the remaining 4 directors each get a split of the 20% or can they just sit as issued but not allotted, owned by the company? Maybe for distribution at a later date?
Many thanks in advance.
Replies (5)
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If he is reconciled to giving them up without payment let him gift them to the other shareholders. A purchase by the company for no consideration would be much more trouble and would achieve nothing that a simple gift would not achieve.
John ...
What about CGT on gift? (with possible holdover). Possible employment-related securities implications?
I was taking as read that any gains would be held over. But if the shares have no value, as the terms apparently agreed strongly suggest, there will be no gains need ing to be held over, and any employment related securities issues will be of no consequence.
One of the Directors hand back his shares to the company
One of the director wants to hand back his shares to company without any money paid or given anybenefits in kind. It seems to me that there is no value left over in the company concerned otherwise the leaving director will not hand back his to the company without any payment ett or buy out of his shares.I want to know whether the leaving director has been forced by other directors or shareholders him to leave the company without any compensation in kind? It could be possible in small private limited companies, that the majority of directors tend to gang together and force the director toleave the company for the underperformance or for some other reasons to leave the company.The leaving director doesn't want to litigate for his share of the company because there is no value left in the company.This bring us to second question what sort of treatment should be given to these shares whether it should be allocated to other shareholders and the directors. This could be dealt in two ways either allocating these to other holders in proportion to their holding in the company or to reduced the issued share of the company by passing special resolutions at the board level and approved by the shareholders in specially arranged meeting of the shareholders.
Second question is only question
@ M E Bhayat
Your second question is the one that has been asked and answered. Unless the OP acts individually for the director that is leaving, in which case they have a potential conflict of interest issue, they should not address your first question at all.
It may well be that the director that is leaving has been forced out by the other 4 directors and 80% shareholders. It may even be that the nil value on the shares is as a result of this. Even assuming that the OP is in a position to know either way, that is none of their business. The company is their client and all they need to concern themselves with is dealing with the transaction correctly. Indeed, if they were to take up arms on behalf of the departing director, they would be acting against their client's interests. That cannot end well for the OP if the remaining directors sought to make an issue of it.