Share reorganisation - husband and wife company
Clients hold shares 50:50 in a company and has to date been paying dividend equally to husband and wife. They now want to pay dividends only to wife. Approx 75% of income derives from husband's activities. I have read that dividend waivers are not a good option long-term and I am nervous about implementing client's wishes. Friend's accountant has advised A and B shares but I'm not sure how to go about this. Given that the company was set up with equal shareholdings (they each subscribed for their shares), would if Arctic Systems give protection to the following:
Existing ordinary shares are divided into 1 x A and 1 x B ordinary shares. Husband gives A shares to wife. Shares rank equally in all respects except that dividends may be paid at different rates on different classes of shares. Can anyone see any problems with this approach? If wife gives B shares to husband, would this affect anything? Will they be caught by settlements legislation?