How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Alex J. Your Own Question

Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3614
Experience:  Solicitors 2 years plus PQE
13113900
Type Your Law Question Here...
Alex J. is online now

What is the legality behind a seed capital deal?

Resolved Question:

What is the legality behind a seed capital deal?
Submitted: 3 years ago.
Category: Law
Expert:  Alex J. replied 3 years ago.
Hi,

Thank you for your question and welcome.

My name is XXXXX XXXXX I will assist you?

Are you asking about the legality of offering seed capital or investing it?

Kind regards

AJ
Customer: replied 3 years ago.

Offering seed capital thanks

Customer: replied 3 years ago.

Eg. Looking for seed capital.

Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

The legality arising around if you are offering shares for sale.

If it is non descript investment opportunity to invest in a trading business then it is unlikely to fall under any FCA regulation if as a result of the offer someone buys into the share capital of the company then this too also will not be regulated.

The issues tend to come where some says they are looking for investment and will offer 25% of the shares in their company for the investment. This would have to be done through an authorised broker.

Would you like to discuss this further?

Kind regards

AJ
Customer: replied 3 years ago.

What is the amount of shares needed to retain full authority.


 


Let's say i am on 100 shares and 1 share = 1 vote, does 25% = to 25 shares?


 


 

Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

It depends what the articles say but normally voting is weighted on the percentage of the share capital you own.

For example to pass a special resolution you need people to vote in favour of that resolution who represent at least 75% of the voting share capital.

Therefore in theory to retain full authority of the company you need at least 75% of the voting share capital (i.e 75 shares in your example). However assuming the articles were standard, a 26% stake could allow you to block most significant actions of the company.

Kind regards

AJ
Customer: replied 3 years ago.

Does seed capital only require equity sales?

Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

Seed capital is a term of art it can be an investment in a business by way of debt or equity or a combination of both.

For example I invest £10k by way of a loan and receive 100 shares at nominal value and a debenture to secure the loan.

Kind regards

AJ
Customer: replied 3 years ago.

Right, what is nominal value legally?


 


And how are debentures issued

Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

The nominal value is what issued value of the shares are without any premium. This will be detailed in the articles and statement of capital of the company.

For example 100 shares of £1 each means the company has a nominal share value of £100. It may be that the shares are worth substantially more than this because of the underlying asset value of the company.

A debenture is just a standard document that a company enters into with the debenture holder. It will contain a fixed and floating charge over a company's assets to secure specified liabilities (like a loan for example). It is then registered at Companies House.

Kind regards

AJ
Alex J., Solicitor
Category: Law
Satisfied Customers: 3614
Experience: Solicitors 2 years plus PQE
Alex J. and other Law Specialists are ready to help you

What Customers are Saying:

 
 
 
  • Thank you so much for your help. Your answers were really useful and came back so quickly. Great! Maggie
< Previous | Next >
  • Thank you so much for your help. Your answers were really useful and came back so quickly. Great! Maggie
  • A quick response, a succinct and helpful answer in simple English. I believe I can now confront the counter party with confidence -- worth the 30 bucks! Rick
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP
  • I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin
  • Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther
 
 
 

Meet The Experts:

 
 
 
  • Jo C.

    Jo C.

    Barrister

    Satisfied Customers:

    30316
    Over 5 years in practice
< Previous | Next >
  • http://ww2.justanswer.co.uk/uploads/EM/emus/2015-7-7_192327_bigstockportraitofconfidentfemale.64x64.jpg Jo C.'s Avatar

    Jo C.

    Barrister

    Satisfied Customers:

    30316
    Over 5 years in practice
  • http://ww2.justanswer.co.uk/uploads/BE/benjones/2015-12-1_0437_ennew.64x64.jpg Ben Jones's Avatar

    Ben Jones

    UK Lawyer

    Satisfied Customers:

    11553
    Qualified Solicitor - Please start your question with 'For Ben Jones'
  • http://ww2.justanswer.co.uk/uploads/BU/Buachaill/2012-5-25_211156_barrister5.64x64.jpg Buachaill's Avatar

    Buachaill

    Barrister

    Satisfied Customers:

    1754
    Barrister 17 years experience
  • http://ww2.justanswer.co.uk/uploads/JO/jojobi/2013-3-19_0265_maxlowryphoto.64x64.jpg Max Lowry's Avatar

    Max Lowry

    Advocate

    Satisfied Customers:

    894
    LLB, 10 years post qualification experience
  • http://ww2.justanswer.co.uk/uploads/UK/UKLawyer/2012-4-12_9849_F2.64x64.jpg UK_Lawyer's Avatar

    UK_Lawyer

    Solicitor

    Satisfied Customers:

    750
    I am a qualified solicitor and an expert in UK law.
  • http://ww2.justanswer.co.uk/uploads/KA/Kasare/kasare.64x64.jpg Kasare's Avatar

    Kasare

    Solicitor

    Satisfied Customers:

    402
    Solicitor, 10 yrs plus experience in civil litigation, employment and family law
  • http://ww2.justanswer.co.uk/uploads/OS/osh/2015-7-7_19268_gettyimagesb.64x64.jpg Joshua's Avatar

    Joshua

    Lawyer

    Satisfied Customers:

    8199
    LL.B (Hons), Higher Prof. Dip. Law & Practice