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Urgent advice - Taking on Limited Co. as sole shareholder

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  • Urgent advice - Taking on Limited Co. as sole shareholder

    Please assist me on this, I've been offered a company that employs 6 people, (where I work) as a going concern, the main issue I have is do I accept all shares or split with the wife who doesn't work there. I was under the impression that to retain Limited status I'd need to have more than 1 share holder.
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  • #2
    A limited company must have at least one shareholder but there is no limit on the number of shareholders. If you are being offered to purchase the company, might I suggest you seek some proper legal advice - it can be a complex area of law and you need to make sure you get it right and understand your role and responsibilities.
    Check out some useful guides below

    A guide to voluntary termination
    Seting aside a CCJ
    Completing an N180 Form (Courtesy of Jaguarsuk)

    - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
    LEGAL DISCLAIMER
    Please be aware that this is a public forum and is therefore accessible to anyone. The content I post on this forum is not intended to be legal advice nor does it establish any client-lawyer type relationship between you and me. Some of the content I post may include example wording, letters, or other similar responses but they are intended purely for informational and educational purposes. Using some or all of the content I post may fail to meet your needs that is specific to your situation. Therefore any use of my content is at your own risk and I cannot be held responsible in any way. It is always recommended that you seek independent legal advice and you can do this through the Law Society's Find a Solicitor database, by contacting your local Citizen's Advice Bureau or legal advice centres such as LawWorks. You may also be able to seek legal advice from your local university who may run a free (but limited) legal advice clinic to members of the public.

    Comment


    • #3
      Originally posted by Augustus View Post
      Please assist me on this, I've been offered a company that employs 6 people, (where I work) as a going concern, the main issue I have is do I accept all shares or split with the wife who doesn't work there. I was under the impression that to retain Limited status I'd need to have more than 1 share holder.
      Thanks R0B, in terms of taking the business over, its a case of being given the shares rather than buying them. Is that more straightforward ?

      Comment


      • #4
        Not necessarily because every company is governed by their articles of association and those vary from company to company. For example, do the articles restrict or impose conditions on the sale or transfer of shares such as shareholder consent or board of director approval.

        There are other considerations to factor in such as whether the parties should document the agremeent via a share tansfer agreement, what about due diligence on the company - are you going to take the owner's word that it is a going concern and do the financials stack up?

        Under normal circumstances, you cannot simply 'hand over' the shares and that's that. You need to complete the stock transfer form in order to obtain legal title to the shares. You are not the legal owner of the shares until you are registered on the company's register of members. Other things such as whether the business owns any intellectual property and whether as part of the takeover the IP will also transfer.

        Then you have communications to the employees, updating Companies House with new shareholders and those with significant control, or adding/removing directors from the list.

        Stamp duty also has to be paid on the transfer of shares unless the purchase price is under a certain amount, which if I recall is around £1,000. If as you say you are being gifted them, then there might be some legal issues around that too and having to do it the right way.

        There could be a whole host of other things relevant to the takeover which I've not covered which is why you probably need an expert lawyer or equivalent to assist you on this.

        Of course if you have all of the above covered then you should be fine but in reality, I suspect not.
        Check out some useful guides below

        A guide to voluntary termination
        Seting aside a CCJ
        Completing an N180 Form (Courtesy of Jaguarsuk)

        - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
        LEGAL DISCLAIMER
        Please be aware that this is a public forum and is therefore accessible to anyone. The content I post on this forum is not intended to be legal advice nor does it establish any client-lawyer type relationship between you and me. Some of the content I post may include example wording, letters, or other similar responses but they are intended purely for informational and educational purposes. Using some or all of the content I post may fail to meet your needs that is specific to your situation. Therefore any use of my content is at your own risk and I cannot be held responsible in any way. It is always recommended that you seek independent legal advice and you can do this through the Law Society's Find a Solicitor database, by contacting your local Citizen's Advice Bureau or legal advice centres such as LawWorks. You may also be able to seek legal advice from your local university who may run a free (but limited) legal advice clinic to members of the public.

        Comment


        • #5
          R0B, that's some great advice there, and I really appreciate it.

          I suspect that the agreement would be a sale of the shares for £1 or something similar to that rather than actual gifting. They're advising me in the next day or so.

          Fantastic resource here, thank you!

          Comment


          • #6
            If the cost of the shares are being sold for less than their worth i.e. the sahres valued at £10 but only sold for £1, there could be further legal issues in that they are being sold at an undervalue.

            Depdning on the cost of the shares there's also ways around it where you don't have to pay for them upfront, you can effectively delay the payment of those shares until called upon (or even part-pay) but that's can add complexity to the sale and you would need expertise for that.

            I've provided a link below, which the the Company Law Club and it is a goldmine for resources on companys and procedures - I used the Company Law Club website for my studies on company law years ago though it's been revamped and a lot more content has been added with plenty of references to the Companies Act 2006 - if you plan on taking over the company, I recommend you bookmark that site and as a go to for understanding rights, rules and duties particularly the "Company Law Basics" section.

            https://www.companylawclub.co.uk/transferring-shares
            Check out some useful guides below

            A guide to voluntary termination
            Seting aside a CCJ
            Completing an N180 Form (Courtesy of Jaguarsuk)

            - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
            LEGAL DISCLAIMER
            Please be aware that this is a public forum and is therefore accessible to anyone. The content I post on this forum is not intended to be legal advice nor does it establish any client-lawyer type relationship between you and me. Some of the content I post may include example wording, letters, or other similar responses but they are intended purely for informational and educational purposes. Using some or all of the content I post may fail to meet your needs that is specific to your situation. Therefore any use of my content is at your own risk and I cannot be held responsible in any way. It is always recommended that you seek independent legal advice and you can do this through the Law Society's Find a Solicitor database, by contacting your local Citizen's Advice Bureau or legal advice centres such as LawWorks. You may also be able to seek legal advice from your local university who may run a free (but limited) legal advice clinic to members of the public.

            Comment

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