My client is MD of a family company. Several family members work in the company and are on market salaries. The shares are widely distributed amongst the family at present with one share class.
The MD keeps pressing me to reorganise matters to bring in alphabet shares, reduce salaries to say £624 per month and pay out varying amounts to the different share classes to top up the nominal salaries. I keep advising against but I can’t quite convey to him the stumbling blocks. The company has a significant break up value.
In what circumstances would you go ahead with a reorg such as this? Or would you never do it?