Re: Company dissolution and buy back My client a 50/50 shareholder and co-director of a limited company set up with a friend in England. The company was originally set up in June 2013 to offer money transfer business but despite having a license from Financial Conduct Authority (FCA) could not obtain high street bank account to do so. They decided to offer instead agency work for leading money transfer companies and other related services. The company is not heading in the right direction and there are clashes between them. My client co-director informed him that he would like to leave the company but want a payout of £50,000.00 or they close down the company. My client informed the co-director that the company don't have that money to buy him out. My client requested that the co-director buys him out of £25000.00 and he would leave the business for him but have received no response. They hired a consultant to sell the business and the license as a going concern without success. They have each contributed £25,000.00 towards rent and other expenses (director’s loan or director’s current account). .Apart from the financial investment, my client have contributed more to the business in terms of time, introduction of services and use of personal assets. The business is 2 years and three months into a leasehold agreement. My client can see prospects for the business in few months time but the co-director is not convinced. My client would like to continue with the same name or set up completely new company to carry on the existing business in the same premises. He has informed the agencies and suppliers and have assured him that they would like to carry on business with him once they break-up. They have no "contract" or "partnership agreement" in place. The company does not have overdraft or business loan. The company has no assets. There is no profitable track record or goodwill except Money Business Services license which is not even of any value without a high street bank account. If they close down the company would they would lose the Financial Conduct Authority (FCA) license which cost them lot of money to obtain. The company was set up by a company formation agent. My client has advertised the name extensively and is building a healthy client base. He told his co-director resign as a director but there is no sign of him doing so without a pay-off even though he is desperate to leave for health and financial reasons. I have not handled such a situation before.
My questions are:
1. Can my clien set up a new company on 31 December 2015 and start trading with the new name and at the same premises from 1 January 2016?
2. If they dissolve the company can my client buy it back later as a former director and transfer the old company to the new one and retain the combined financial investment to date of £50,000.00?
3. If they dissolve the companyy and my client buy it back in 3 months time can get the FCA license transferred to the new company or has to apply again?
4. Can my client continue the new business in the leasehold property until the term of the lease expires or he has to re-negotiate a new lease agreement with the landlord?
5. How can the business be valued to determine what is due to both as a pay-off?
6. Do they have to prepare a set of accounts to know the position?
My answers
Re: Company dissolution and buy back
My client a 50/50 shareholder and co-director of a limited company set up with a friend in England. The company was originally set up in June 2013 to offer money transfer business but despite having a license from Financial Conduct Authority (FCA) could not obtain high street bank account to do so. They decided to offer instead agency work for leading money transfer companies and other related services. The company is not heading in the right direction and there are clashes between them. My client co-director informed him that he would like to leave the company but want a payout of £50,000.00 or they close down the company. My client informed the co-director that the company don't have that money to buy him out. My client requested that the co-director buys him out of £25000.00 and he would leave the business for him but have received no response. They hired a consultant to sell the business and the license as a going concern without success. They have each contributed £25,000.00 towards rent and other expenses (director’s loan or director’s current account). .Apart from the financial investment, my client have contributed more to the business in terms of time, introduction of services and use of personal assets. The business is 2 years and three months into a leasehold agreement. My client can see prospects for the business in few months time but the co-director is not convinced. My client would like to continue with the same name or set up completely new company to carry on the existing business in the same premises. He has informed the agencies and suppliers and have assured him that they would like to carry on business with him once they break-up. They have no "contract" or "partnership agreement" in place. The company does not have overdraft or business loan. The company has no assets. There is no profitable track record or goodwill except Money Business Services license which is not even of any value without a high street bank account. If they close down the company would they would lose the Financial Conduct Authority (FCA) license which cost them lot of money to obtain. The company was set up by a company formation agent. My client has advertised the name extensively and is building a healthy client base. He told his co-director resign as a director but there is no sign of him doing so without a pay-off even though he is desperate to leave for health and financial reasons. I have not handled such a situation before.
My questions are:
1. Can my clien set up a new company on 31 December 2015 and start trading with the new name and at the same premises from 1 January 2016?
2. If they dissolve the company can my client buy it back later as a former director and transfer the old company to the new one and retain the combined financial investment to date of £50,000.00?
3. If they dissolve the companyy and my client buy it back in 3 months time can get the FCA license transferred to the new company or has to apply again?
4. Can my client continue the new business in the leasehold property until the term of the lease expires or he has to re-negotiate a new lease agreement with the landlord?
5. How can the business be valued to determine what is due to both as a pay-off?
6. Do they have to prepare a set of accounts to know the position?
Thank you very much.