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Alphabet shares.

What is the practical way to do this. Existing Articles of association does not allow

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 I have  a  new client with two unrelated shareholders/directors who work significantly different hours etc. in the service industry and want to extract profits accordingly.  Very small company turnover under £100k.  They have used model articles and this does not allow the issue of diffract class of shares ( I don’t understand why the restriction?).   What is required is the existing 2 shares to be reclassified as A  shares and the issue B and C shares .

I have looked into this and what is required is to have a special resolution followed by either amending the existing articles or issue new articles.  I assume easiest would be to submit new articles , followed by issuing the nee class of shares. I could tell then to go to solicitors who I guess would a few hundred pounds which is not necessary.  

My questions are

1. How do I get a hold of a new set of articles of association which are compliant for this and just send them to companies house with the special resolution?

2. How do I change the existing shares to A shares. Is this simply a resolution and inform companies house

Many thanks

 

 

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02nd Feb 2018 13:40

Yes they need to amend the Articles as you say. It’s up to your clients whether a few hundred pounds to solicitors is money well spent in comparison with you doing it for them.

Yes they need to re-designate the shares. There is a Companies House form for it.

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02nd Feb 2018 13:59

Ask one of the company formation agents, such as QF Registrars, to do it all for you.

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to Euan MacLennan
02nd Feb 2018 14:09

Agree with Euan on this.

For me it's one of those jobs where the risks of getting it wrong combined with the hassle and time involved, far exceed the fee recoverable.
I've used BTC Corporate & Compliance (www.btc-nw.co.uk) for these, plus other shareholder agreements and such like, for a very reasonable fee and a quick process. I would imagine most credible formation agents would be able to do it.
Personally, this stuff just isn't my bag.

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02nd Feb 2018 13:59

Here is an article that tells you exactly what you need to know...
"Alphabet Shares - Get the details right"

https://www.accountingweb.co.uk/business/finance-strategy/alphabet-share...

The actual process is given in bullet point format nearer the end of the article under the heading:
"What are the practicalities?"

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02nd Feb 2018 14:10

Thank you all.

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03rd Feb 2018 12:29

Our article may be of help to you -

https://www.fcls.co.uk/share-restructures-requirements-pitfalls/

You can also instruct us to do this for you - £170 + vat. All documents emailed to you within 24 hours of instructions.

Adrian

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By chatman
07th Feb 2018 11:01

I know this is not quite what you asked but if you vary the return paid to the shareholder-directors because the time they spend on company work is very different, do you not run the risk of HMRC saying it is actually salary they are being paid, and not dividends?

I am not too hot on tax, so I am sure other posters will correct me if I am wrong.

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to chatman
07th Feb 2018 11:18

I don't think that you are right in these circumstances, but that isn't the same thing as being wrong.

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By Robbo
to chatman
07th Feb 2018 11:25

It would certainly give HMRC an excuse, dividends are a return on capital, wages are paid for services rendered, wages are subject to PAYE & NIC as is disguised remuneration .
In an obvious case I would expect HMRC to take thar view, but of course if the amounts are coparitively small it may not come to their attention

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07th Feb 2018 12:32

Smells of Managed Service company to me

https://www.contractoruk.com/managed_service_companies

I personally wouldn't do that I might

1. get them a company each or
2. sell shares from one to the other or
3. leave it 50/50 and pay extra salary.

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By Ruddles
to Tom 7000
07th Feb 2018 14:53

I can see nothing that even hints at a Managed Service Company.

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