Rearranging shareholdings

[ittony]

Does the company have any retained funds? If not, why would it be worth anything?

No. Because it makes a profit.

[Paralytic]

No. Because it makes a profit.

It has no retained funds because it makes a profit?

[WTFH]

OK, so I’m trying to understand the convoluted story. Tell me which bits are wrong:
1. You’ve been offered some work for a company
2. You (or they) have come up with a plan to temporarily give you shares in the company.
3. You get paid dividends, rather than being paid as a salary or a contract rate.
4. The dividends do not go to an umbrella or Ltd, but directly into your personal account.
5. When the work finishes, so does your shareholding in the company.

There’s no contract, no insurance, no work-related pay.

Am I close?

[ittony]

It has no retained funds because it makes a profit?

Does the company have any retained funds?

No.

If not, why would it be worth anything?

Because it makes a profit.

[Lance]

I'd be offering Jam Today in return for my questions answered. Do all accountants work only on a Jam Indefinitely basis?

You’re the one working for jam....
You’re doing work for no pay, but expect shares in lieu of payment.
Or have I misunderstood?

[Lance]

All I can think is there are two scenarios here.

1. Tom and Dick are trying to get loads of free work from Harry. Tom and Dick are smart. Harry is an idiot.

2. Tom and Dick are idiots. Harry doesn’t realise this so is contemplating working with them.

There’s no way near enough detail to make any better informed decisions.
If Harry is smart he’ll either walk away or seek professional legal advice.

[Paralytic]

No.


Because it makes a profit.

Do you know what retained funds are?

[Lance]

Does Harry realise that with just 20% of the shares, Tom and Dick can simply increase the number of shares in the business and effectively dilute Harry as low as they desire? This is legal, and common. Only a rigid contract can prevent this.

[Paralytic]

Does Harry realise that with just 20% of the shares, Tom and Dick can simply increase the number of shares in the business and effectively dilute Harry as low as they desire? This is legal, and common. Only a rigid contract can prevent this.

Harry should definitely read the articles of association and any shareholder agreements for the company. If Harry doesn't know he should do this, Harry should just as for a payment method that would not potentially be seen as tax avoidance.

[ittony]

You’re the one working for jam....
You’re doing work for no pay, but expect shares in lieu of payment.
Or have I misunderstood?

No, I misunderstood your enigmatic Wikipedia link to imply I wanted jam today from an accountant.