We have a family company running for 25 yrs. Owned by wife (a) /husband (b) who jointly own 480 shares, brother (c) owns 220 shares. total share capital of 700.
The company has significant cash balance (1.5Mil) with directors only taking minimum salaries/drawings and dividends. Annual net profits are approx 300-400K. We have been advised and were on the assumption that keeping all monies in the company, only taking out what we need is the most financially sensible - as when we close it, it would be the most tax efficent).
Time has come where the (C) wants at least £300K of cash towards personal downpayment on moving to new house.
Can anyone advise the best way for this to occur; (a) and (b) have plenty of personal cash outside of family LTD company, but (c) doesnt.
Someone has sounded the idea of selling Company Shares to Holding company, in two equal parts. (There are no personal issues with (a)and(b) accepting that they have 50% and (c) has 50%. the only reason (c) has so little is simply because he joined the business much later.
I dont know much and i know i need advice but i need to understand some basic reasons for this and benefits; (a)+(b) dont need to draw / take this money out just yet, but it must be done formally so that it is equal to both entities (a+b) and (c).
Sorry for the confusing breakdown.
Any ideas would be greatfully welcomed.