interest or distribution

interest or distribution

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I have been curious about this for some time: if several shareholders lend money to a property development spv is there anything inherently problematic about some shareholders choosing to be rewarded by a mixture of interest and distribution where others may wish to waive their interest and receive purely distribution - I am assuming this outcome could be achieved with a robust shareholder agreement and different classes of shares?

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By Ruddles
17th Apr 2016 18:58

A little more information might be helpful

Such as the precise reasons for the above.

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paddle steamer
By DJKL
18th Apr 2016 10:30

Above and below line costs spring to mind.

Could get very tangled if parity is required within the agreement given the  tax deductibility of  the interest paid as against the non deductibility of dividends paid.

Other complications are of course things like having sufficient distributable reserves.

I often think that where everyone has different needs the LLP SPV  possibly ought to be considered as an option so that each party has a degree of control over their own destiny (modus of cash extraction in their own hands)

 

 

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By nick farrow
18th Apr 2016 13:23

thanks DJKL & Ruddle

thanks for your comments - there could be capital losses available to consider before the new TAA rules re phoenixing

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