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Alex J.
Alex J., Solicitor
Category: Law
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Experience:  Solicitors 2 years plus PQE
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By what legal process do share holders of a Limited Company

Resolved Question:

By what legal process do share holders of a Limited Company that is voluntarily wound up (due to retirement) receive the residue from the sale of company assets, stock, machines etc and the freehold shop premises.
Submitted: 2 years ago.
Category: Law
Expert:  Alex J. replied 2 years ago.
Alex J. :

Hi, Thank you for your question and welcome. My name is ***** ***** I will assist you. Assuming that this liquidation is a solvent liquidation the distribution of the assets to the shareholders can be done through what is known as a "distribution in specie" . There is not really a formal process for this but it does require either a special resolution or a court order.

Alex J. :

Hi, I have to step away from my computer i will return in 5 mins. Kind regards AJ

Customer:

OK Alex.

Alex J. :

Hi, Thank you, ***** ***** returned.

Customer:

Thanks Alex. I haven't seen a reply yet to my question.

Alex J. :

Hi, Thank you for your question and welcome. My name is ***** ***** I will assist you. Assuming that this liquidation is a solvent liquidation the distribution of the assets to the shareholders can be done through what is known as a "distribution in specie" . There is not really a formal process for this but it does require either a special resolution or a court order.

Alex J. :

Have you seen the above sentence?

Alex J. :

Kind regards AJ

Customer:

I'm not sure how long I should wait for an answer?

Alex J. :

Hi, Thank you. The process is called a distribution in specie -

Alex J. :

Can you tell me whether the liquidation is solvent?

Customer:

Yes thank you Alex.

Alex J. :

Hi, Thank you. Can you give me any further information? How many shareholders are there for example? Do any creditors need to be paid? Do you have an accountant?

Customer:

I'm pretty sure it will be solvent.

Alex J. :

Hi, Thank you. The directors will have to propose and distribution so they will likely (if they have not already done so) have to give a statutory declaration of solvency.

Alex J. :

The accountant may also have to do the same.

Alex J. :

The process is not that straight forward and competent company solicitor should be able to help with the paper work. I would strongly recommend using a solicitor so you have the benefit of their professional indemnity insurance if anything goes wrong.

Customer:

2 shareholders 1 holding 1 share and the other 999 shares Creditors do need to be paid and the company does use an accountant every month.

Alex J. :

Are there enough funds to pay the creditors?

Customer:

It's my brother's company so I believe he has enough funds to pay creditors.

Alex J. :

Hi, Thank you. What stage of the liquidation procedure are you at? Have you passed the necessary resolution?

Customer:

No. I'm in the process of trying to convince my brother aged 78 that it's time for him to sell up and retire.

Alex J. :

Hi, Thank you. Is selling the business as a going concern not an option as well? Or is liquidation the only option?

Customer:

Selling the business must be an option but he is proving difficult to convince that it is time to quit now. My reason for the questions is because I don't want the mega problem as his executor to deal with all his business problems (as I see it) after his death.

Alex J. :

Hi, Thank you. You wont be burdened with this per say - the company will either cease trading or be sold. If you inherit his shares you will be able to decide how best to deal with the company.

Customer:

OK Alex. Many thanks for your help.

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