I have a 3 person company (equal shareholder/directors, not related parties); 1 of the directors is considering retirement within the next 3-4 years. Balance Sheet shows net assets of around £30k (predominantly cash at bank and trade debtors – very minimal fixed assets) and net profit for year averages around £90k. All directors receive salary and dividends on a monthly basis.
The company currently make pension contributions on behalf of all directors. The directors have suggested that the company make increased pension contributions into the pension fund of the retiring director over the next 3 years, of approx. £20k pa. In 3-4 years time she will retire and sell her shares to the existing shareholders for par value. All shareholders/directors are in agreement with this proposal.
Firstly, would this be an acceptable route to take? Secondly, is the process that simple (i.e. completion of stock transfer form and updating confirmation statement and PSC report at Companies House), or is this potentially something more involved. Seems straight forward enough, but if I am missing something here then would like to know in advance so I can look into outsourcing this one.
Many thanks in advance