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Selling an LTD between friends

Selling an LTD between friends

If I am to register an LTD and then shortly sell it to a friend, are there any complications that might arise? I would also love a clear list of all the legal documents that need to be drafted.

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01st Mar 2016 22:09

Why doesn't your friend just set up the company? 

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By mikei
02nd Mar 2016 00:59

He can't open a business bank account due to a bad credit history.

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02nd Mar 2016 06:53

Bank's are not stupid

So you think that you could open the bank account and then he would get the bank to make him signatory? Or you are going to make payments for him indefinitely?

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By mikei
02nd Mar 2016 07:52

Make him signatory and then remove myself from the mandate.

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02nd Mar 2016 08:00

Why bother

mikei wrote:

Make him signatory and then remove myself from the mandate.

 

Why bother asking for advice when you know what to do then?!

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02nd Mar 2016 07:52

How do you think the bank will respond when he tells them that the company has completely replaced its directors and shareholders?

As Peter says, they are not stupid.

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02nd Mar 2016 07:59

But you said you were going to sell the company to him as well.

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By mikei
02nd Mar 2016 07:59

What if the business is making money from the start? Would the bank still be so attached to the fact that he's been bankrupt from a divorce (not actual bad credit, as I have firstly mistakenly mentioned)? 

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By mikei
02nd Mar 2016 08:00

Well, that's what would ideally happen, I'd sell him the ltd as well

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02nd Mar 2016 08:02

Going back in time

banks and their customers built up a loyal and trusting relationship.

Over time and, given how the banks imploaded, around 2007, the strength of those relationships was eroded.

However, more importantly these days and, of much more use, is a raft of statistical information, surrounding almost each and every individual which financial institutions use to sort the "wheat from the chaff". In time, this form of information will possibly "out" both you and your friend.

Whilst what you are suggesting to do isn't illegal, it may well be morally and ethically inappropriate, to say the least.

There are "friends" and, there are friends. One wonders if you've asked yourself the question, "what's in this for me"? What happens when the old "manure" hits the fan?

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By mikei
02nd Mar 2016 08:05

Chris Ash,

I have the plan, but I don't know anything about the details of the sale and also I'm not aware of the actual complications you guys have pointed out.

Time for change,

What are you suggesting would go wrong in the end?

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02nd Mar 2016 08:37

I've found, through almost

60 years of experience that, if you keep things simple, you at least give whatever project you're embarking upon, more than half a chance.

From the outset, this is a scheme, which you and your friend have obviously discussed and decided that this arrangement is probably how your friends aims can be achieved.

You've imagined that you can post your question to this forum and, (possibly) hear what you wanted to hear? Thumbs up and, all that.

Carrying on with my earlier theme, as regards simplicity, the best advice I can provide is; that your friend arranges a discussion with a suitable professional adviser (more than likely an accountant) and discusses how he can achieve his requirements without involving any other third parties. Any other method is, in my view, doomed from the outset.

 

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02nd Mar 2016 08:49

Your Friend

 Your friend can set up a business account with these guys http://www.mycashplus.co.uk/ no need for you to get involved.

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By JimFerd
02nd Mar 2016 09:02

I doubt the banks would do credit checks for additional signatories, at least they never used to. All that was done was the usual basic money laundering checks.

I guess the problem would be being appointed as a director, as presumably the friend has been disqualified due to being bankrupt.

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By mikei
02nd Mar 2016 10:26

Disqualified

JimFerd wrote:

I guess the problem would be being appointed as a director, as presumably the friend has been disqualified due to being bankrupt.

Jim, oddly enough, he hasn't. Apparently it's just that the banks don't want to touch him, but it sounds more and more like he doesn't fully understand his position.

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02nd Mar 2016 09:06

I would suggest

that the best way would definitely be to find another bank rather than trying to fraudulently set your friend up in this manner. I don't think the bank would be required to keep the account open, I would imagine their terms and conditions would allow them to close the account were they to be of the opinion you had misrepresented the situation when opening the account.

There's no reason why banks have to stop companies owned by formerly bankrupt directors from having current accounts, it might be wise to not give them credit but there must be some out there, like perhaps the one suggested above, that would have no issue with a current account.

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By mikei
02nd Mar 2016 10:24

Sincere thanks for all the answers, guys, the insight was truly helpful.

I've decided I won't be going forward with this. 

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By Clinton
02nd Mar 2016 11:11

Putting aside the ethical questions for a moment, would this work?

I have no doubt it would. Banks, obviously, have a few more lessons to learn.

There is a someone I know who does a thriving business buying companies on the cheap for just their VAT registrations and bank accounts. He then sells them on; there's obviously a market for these.

Buying one of his companies is not something I'd advise anyone to do, but he's selling a fair few of them every week!

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By mikei
02nd Mar 2016 16:48

Sounds like a lot of work, though, for all the papers involved, no? How much could an incorporated ltd sell for?

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By Clinton
02nd Mar 2016 17:05

He charges between a few hundred to a couple of thousand. 

The people who buy these businesses don't seem to be worried about the potential liabilities they're taking on. They do seem to know what they're doing though.

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