Share issue at discount
A limited company has 1,000 authorised shares at nominal value £5,000 per share. The business has allotted two shares at this stage, 1 share to each of the two directors, the two shares are fully paid up for £10,000. A new investor wishes to buy a third of the authorised equity (333 shares) for £333,000 at a discount of £4,000 per share under the par value.
If I remember correctly it is not permissible for companies to issue shares at a discount (not sure why this would be, they are after all allowed to issue at a premium?). The business is keen to get the investment it needs but the investor wants 33% of the business for his money. The business has a net worth of just £10,000 at this stage, so the investor is paying £333,000 for just 33% of £10,000 (as the potential for the business is very good). Although the shares would be issued at a discount they are in fact way over the balance sheet valuation of the percentage ownership being given away.
What's the best way forward to expedite this deal?
- Professional coaching claimable? 94 1
- Sage instant account codes 124 1
- Networking 140 1
- What VAT to reclaim on van purchased on HP? 265 4
- Mobile phones, directors of micro-companies 181 1
- Turnover on a tax return 309 8
- incorrect old p60 452 11
- Cashflow forecasting software 304 4
- Letter to HMRC over 3 months ago, still no reply 1,933 19
- Companies House paper incorporation - date of birth omission 295 4
- US company hiring UK citizens in UK 252 3
- VAT refund 190 1
- Is there an AIA calculator anywhere 264 1
- Reclaiming VAT on refurbishment cost? 270 3
- Missing tax return 397 4
- Are you going to Tick and Bash on 21 May? 1,130 30
- Inflation and fees 1,412 24
- Sage Priority Support 193 3
- Cost of demolition of a shed - revenue or capital? 847 24
- Micro-entity accounts 320 1