Looking to close a company, I've gone through a process of payimng off suppliers, collecting debtors, ceasding to trade then declaring and paying dividends and now the company in question has £3,100 in cash, £3,000 share capital and £100 of retained earnings. The shares are owned by a 100% parent company B. If A can't declare any further dividends to B (except £100, because otherwise, as I understand it, it would be an illegal distribution), how do I get the last £3,000 of cash back to the parent B before striking off A? I can't find mention of this anywhere. Co. House says the cash reverts to Crown. What?
Any help appreciated.Thx
Replies (5)
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Most people
would just pay it as a capital distribution, bearing in mind that the company is to be struck off anyway. That's effectively what happens to all share capital when a company is struck off informally.
Capital repayment
Exactly as cloudcounter says - the distribution of the remaining capital is permitted before dissolution of the company and will be capital and reserves (£100) from a Companies Act point of view. And for tax purposes will wholly count as a capital distribution to the parent company.
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The £100 can be a dividend from income and the £3,000 is a return of capital.
I think technically £3k does belong to the crown because a return of capital is illegal ? but the crown doesn't chase this.
Is there not new legislation that sets the limit on whats allowed to be distributed without involving a liquidator (not the £25k tax limit). maybe someone can confirm the excat position?
Solvent or insolvent
Solvent companies can be liquidated without the need for formal liquidation & the distribution is less than 25k then treated as capital as stated by other commentators...
Members' voluntary liquidation - where the shareholders of a company decide to put it into liquidation, and there are enough assets to pay all the debts of the company, i.e. the company is solvent.