New Shareholder To Existing Ltd Company

[Riccyboy]

Hi,

I am adding a new equal class A shareholder (wife) to my ltd company and need to know how dividends are allocated. I am coming towards the end of my trading year and want to make the shareholder change before the annual accounts are prepared to allow for an equal dividend to be paid to both shareholders. Can anyone advise me of any potential issues with this approach or confirm that what I am doing is indeed correct?

Many thanks

[Sally@InTouch]

Hi,

I am adding a new equal class A shareholder (wife) to my ltd company and need to know how dividends are allocated. I am coming towards the end of my trading year and want to make the shareholder change before the annual accounts are prepared to allow for an equal dividend to be paid to both shareholders. Can anyone advise me of any potential issues with this approach or confirm that what I am doing is indeed correct?

Many thanks

To comply with S660A (Income Splitting) legislation the shares must have full rights and no restrictions. If you only have 1 shares, then issue and allot your wife 1 also. If you have more than one, simply transfer 50% using a stock transfer form which you can find if you google it.

[northernladuk]

Wouldn't there be an issue giving her a share so late in the year and then giving the same amount. It looks like blatant tax avoidance...

Also in my opinion you should go for a split say 60/40 to reflect that your are main party in the company and to look more credible.

[Sally@InTouch]

Wouldn't there be an issue giving her a share so late in the year and then giving the same amount. It looks like blatant tax avoidance...

Also in my opinion you should go for a split say 60/40 to reflect that your are main party in the company and to look more credible.

If the shares are gifted then there shouldn't be any problem when they are. With regards to share split, different accountants recommend different splits. Some say "don't do it"!
The Arctic Systems case was a 50:50 split. Maybe choose according to your attitude towards risk.

[Maslins]

If you haven't taken any dividends so far, then fine (subject to the useful things Sally points out above).

If you've already taken a load of money out, then it'll only be dividends paid out after the share issue/transfer that can be split 50:50, and I wouldn't recommend attempting to backdate it.