Reply to: A Strange Situation - Shares Ltd Company

[kirkdon]

It should be as long as your articles of association allow it. It should do. You should still get your accountant to assist you but in short you:

* Declare as the director that you are issuing new shares. This ought to be a minuted director's meeting.
* Create a share certificate
* Update the company register
* Notify companies house within 30 days using form SH01 and also provide a statement of capital.

https://www.rapidformations.co.uk/bl...mited-company/

I would certainly not complicate things by messing around with different share classes either; issue ordinary shares, the same class as the existing ones.

Just watch out with allocating more shares if the company has a value to it as there are some anti-avoidance measures that can catch this giving rise to a deemed capital gain.

Not got all the rules to hand but it's there to stop someone who has control of a company giving away part of their shareholding without actually transferring some of their shares to a connected person but instead using the company to issue more shares directly to them.

Just something to think about.

Martin
Contratax Limited

+1

This is known as 'value shifting'.

For example. If the company was worth £10k and you issued an extra 100 shares, your share of the company's value becomes £5k. You would be seen to have made a disposal and would pay CGT accordingly.

There are other ways you can be caught. For example if they each had 100 ordinary shares in the company and then changed 100 of the 200 relating to shareholder 1 to say, 'A' shares with less rights, clearly value has shifted and so the person who transfers value is deemed to make a disposal at market value.

It sounds like it could go either way. I'll definitely talk to the accountant and see what his views on it are and which method he thinks would be best. I didn't intend on playing around with the share classes it was just going to be ordinary shares which hopefully will make things just the slightest bit easier!

We haven't begun trading yet so I'm assuming there shouldn't be much (if any) value to the company?

Thanks all for your help again!

[Martin at NixonWilliams]

Just watch out with allocating more shares if the company has a value to it as there are some anti-avoidance measures that can catch this giving rise to a deemed capital gain.

Not got all the rules to hand but it's there to stop someone who has control of a company giving away part of their shareholding without actually transferring some of their shares to a connected person but instead using the company to issue more shares directly to them.

Just something to think about.

Martin
Contratax Limited

+1

This is known as 'value shifting'.

For example. If the company was worth £10k and you issued an extra 100 shares, your share of the company's value becomes £5k. You would be seen to have made a disposal and would pay CGT accordingly.

There are other ways you can be caught. For example if they each had 100 ordinary shares in the company and then changed 100 of the 200 relating to shareholder 1 to say, 'A' shares with less rights, clearly value has shifted and so the person who transfers value is deemed to make a disposal at market value.

[TheCyclingProgrammer]

Just watch out with allocating more shares if the company has a value to it as there are some anti-avoidance measures that can catch this giving rise to a deemed capital gain.

Not got all the rules to hand but it's there to stop someone who has control of a company giving away part of their shareholding without actually transferring some of their shares to a connected person but instead using the company to issue more shares directly to them.

Just something to think about.

Martin
Contratax Limited

Another reason why OP should talk to their accountant first although it does sound like in this case the company hasn't started trading yet so shouldn't really have any value yet.

I didn't think unmarried couples were considered connected for CGT purposes anyway?

[ContrataxLtd]

Seems like the easiest thing would be to just allocate another 100 shares to you, giving you an equal share. Saves all the potential faff related to gifting/buying shares. You're going into business with each other. Settlements legislation is a red herring - anybody suggesting otherwise is talking nonsense. Businesses do this all the time. Get your accountant to show you how to do it properly.

Shareholding percentage is something for you to both decide but common sense would say split them according to how much input each of you has into the business. If its a true joint venture, then I'd say 50/50.

Just watch out with allocating more shares if the company has a value to it as there are some anti-avoidance measures that can catch this giving rise to a deemed capital gain.

Not got all the rules to hand but it's there to stop someone who has control of a company giving away part of their shareholding without actually transferring some of their shares to a connected person but instead using the company to issue more shares directly to them.

Just something to think about.

Martin
Contratax Limited

[TheCyclingProgrammer]

Okay that seems like a valid option I read something about adding new shares to the company. Would you say that's the easiest way?

It should be as long as your articles of association allow it. It should do. You should still get your accountant to assist you but in short you:

* Declare as the director that you are issuing new shares. This ought to be a minuted director's meeting.
* Create a share certificate
* Update the company register
* Notify companies house within 30 days using form SH01 and also provide a statement of capital.

https://www.rapidformations.co.uk/bl...mited-company/

I would certainly not complicate things by messing around with different share classes either; issue ordinary shares, the same class as the existing ones.

[kirkdon]

Seems like the easiest thing would be to just allocate another 100 shares to you, giving you an equal share. Saves all the potential faff related to gifting/buying shares. You're going into business with each other. Settlements legislation is a red herring - anybody suggesting otherwise is talking nonsense. Businesses do this all the time. Get your accountant to show you how to do it properly.

Shareholding percentage is something for you to both decide but common sense would say split them according to how much input each of you has into the business. If its a true joint venture, then I'd say 50/50.

Okay that seems like a valid option I read something about adding new shares to the company. Would you say that's the easiest way?

[TheCyclingProgrammer]

Seems like the easiest thing would be to just allocate another 100 shares to you, giving you an equal share. Saves all the potential faff related to gifting/buying shares. You're going into business with each other. Settlements legislation is a red herring - anybody suggesting otherwise is talking nonsense. Businesses do this all the time. Get your accountant to show you how to do it properly.

Shareholding percentage is something for you to both decide but common sense would say split them according to how much input each of you has into the business. If its a true joint venture, then I'd say 50/50.

[northernladuk]

Possibly, but that makes a number of assumptions, which based on the original post you cannot possibly know whether they are applicable or not.

You are going to make me cry!

p.s. could you not say the same for 99.9% of posts on here?

[kirkdon]

EDIT : This was posted while I was typing.



Very different set up to the IT contractor shares to wife scam so you really need to speak to your accountant. All the advice on here is about giving wife/gf/a n other shares for no other reason than tax avoidance so not really relevant to you if you are genuinely both going in to business.

One thing to remember though, when you split up it will get very messy. If either director has access to the accounts one could clean the bank out and do a runner leaving the other responsible for the debts (well they both would be but some people can be very bitter). We have at least one poster on here in that situation. More importantly than the share split is what happens in the worst case. Make sure it's documented and done properly.

Thanks. I'll get in touch with the accountant and see where the next step is. I only posted here as I thought I could get some advice from those sort of in the same situation or had been through a similiar thing. I have heard some horror stories from those worst case scenarios!

[kirkdon]

Get a professional valuation of the company and buy them. If they are gifted, then you will fall foul of the income shifting rules because you aren't married / in a civil partnership. Make sure that you take professional advice about how to do this - get it wrong and it will cost you both dearly.

There is only one poster I can think of on CUK who has done this with a partner who they aren't married to - he will be along soon and explain more, no doubt.


There is no "best way" - again, take professional advice. If you are both going to be earning, then it would make sense for the share split to be roughly in proportion to the amount of work / income you do / produce. That's just my thoughts, though.


Just because there is no money in the company doesn't make it worthless. If you are buying the shares from the company, then your professional valuation will take this into account.

I appreciate your response. I'll get in contact with the accountant asap and find out what the next step is.

[TheFaQQer]

Did your search not come up with a lot of stuff about adding a spouse is OK, anyone else it is not?

Possibly, but that makes a number of assumptions, which based on the original post you cannot possibly know whether they are applicable or not.

[TheFaQQer]

What is the best way of me acquiring them in the company? Should I buy them off of my partner, he gift them, we add more? I'm only wondering as if anything does go South at any time I won't be losing out entirely.

Get a professional valuation of the company and buy them. If they are gifted, then you will fall foul of the income shifting rules because you aren't married / in a civil partnership. Make sure that you take professional advice about how to do this - get it wrong and it will cost you both dearly.

There is only one poster I can think of on CUK who has done this with a partner who they aren't married to - he will be along soon and explain more, no doubt.

Also what do you think is the best way to split them, 50/50, 40/60? He's willing to add me as a shareholder also we just aren't sure the best way to go about it.

There is no "best way" - again, take professional advice. If you are both going to be earning, then it would make sense for the share split to be roughly in proportion to the amount of work / income you do / produce. That's just my thoughts, though.

At the moment we haven't taken any money in just in case that makes any difference, but I believe it will start generating some within the coming weeks so better to act sooner than later?

Just because there is no money in the company doesn't make it worthless. If you are buying the shares from the company, then your professional valuation will take this into account.

[kirkdon]

Did your search not come up with a lot of stuff about adding a spouse is OK, anyone else it is not?

Why is he not asking his accountant this?
Why is he not posting on here asking as it is his shares he is giving away?

Yes it did, which is why I'm asking what the best route to go is. He is going to be asking his accountant I just thought I'd do some research myself and see what suggestions people gave back.

[northernladuk]

Hi Everyone,

I know that everyone get's sick of these "how to add a shareholder" threads. I've been lurking and trying to find something that applies to my situation but I can't really find anything.

Well you got that bit right.

My partner (boyfriend) has just set up a Limited Company with him as the Director and 100 shares. Before he set this up, he asked if I wanted to be added and I said no (stupidly) because I didn't want the hassle attached to it - despite knowing was going to be doing work in some capacity for the company anyway.

On reflection I've decided that it makes sense for me to be a Director and Shareholder as it was both of our brainchild and idea, etc. And eventually I would like to run it as well. Again, why I said no in the first place was stupid so it's my own fault.

He has since added me as a Director of the company and I believe that has gone through just fine. The only other thing left is Shares. What is the best way of me acquiring them in the company? Should I buy them off of my partner, he gift them, we add more? I'm only wondering as if anything does go South at any time I won't be losing out entirely.

Also what do you think is the best way to split them, 50/50, 40/60? He's willing to add me as a shareholder also we just aren't sure the best way to go about it.

At the moment we haven't taken any money in just in case that makes any difference, but I believe it will start generating some within the coming weeks so better to act sooner than later?

I appreciate any help! Thanks

Did your search not come up with a lot of stuff about adding a spouse is OK, anyone else it is not?

Why is he not asking his accountant this?
Why is he not posting on here asking as it is his shares he is giving away?

EDIT : This was posted while I was typing.

Web and Graphic Design. I intend on working full time doing pretty much all graphic design work as it will only be the two of us. (And will be taking on Director responsibilities now)

Very different set up to the IT contractor shares to wife scam so you really need to speak to your accountant. All the advice on here is about giving wife/gf/a n other shares for no other reason than tax avoidance so not really relevant to you if you are genuinely both going in to business.

One thing to remember though, when you split up it will get very messy. If either director has access to the accounts one could clean the bank out and do a runner leaving the other responsible for the debts (well they both would be but some people can be very bitter). We have at least one poster on here in that situation. More importantly than the share split is what happens in the worst case. Make sure it's documented and done properly.

[kirkdon]

What does the company do? Will you be doing any fee earning work, or more admin work?

Hi Clare,

Web and Graphic Design. I intend on working full time doing pretty much all graphic design work as it will only be the two of us. (And will be taking on Director responsibilities now)