There is about £60-70k that needs be protected. According to my accountants I can draw £30k free of tax.
Not sure what you mean by "separate trading business"..
Thanks for the reply. Assets were accumulated thorough trade(developing web solutions) and company will continue doing the business.
Could also elaborate bit on the 2 options you've suggested?
Just to clear up two business thing. Once other partner joins he will have same say as me in the current business company is doing so no need for distinction. That also answers the issue of debts and such.
(i) Trying ring these assets by issuing a preference that is entitled to the distribution of this capital;(ii) Issue yourself with more shares that can be redeemed once this capital has been paid back to you.
Are making sense but would like to hear more details on each option, how it is actually works.
No new shares issued yet, but I used to have partner previously so we already have 3 classes of shares set-up see here: http://www.xtmotion.com/compinfo_04973422_712-132527-46385838_1.pdf
Hi Alex, I have reviewed accounting data and discussed this with my partner to be and we agreed on £93,000.
Yes, as long as Martin(new partner) can also receive dividends in the mean time. i.e. solution where I need to take full 93k out before Martin can receive money/dividends would not work.
1/3 & 2/3 split would not work, but other option sounds ok. How would "declare a distribution of the assets to you and then take a charge or debenture over the assets as security" work in real life?
According to my accountants this option will cause that I'm taxed on the money I'm trying to protect. In that case I might as well just take money out and put them back as loan. So no acceptable solution I'm afraid.
Are the option you sugegsted previouly
(i) Issuing different classes of shares:You can amend the articles of association of the company to create a notional Class A share and Class B share.Class A shares would have a preference that say they are entitled to the first £100K (or what ever the assets are worth) in dividend distributions and capital distributions until you have received value equivalent to your shareholding.To do this you would need to pass a special resolution to amend the articles of association of the company and alter the share capital?Bare in mind that creditors would still be entitled to claim against all the assets of the company regardless of how the debt had arisen.(ii) You keep one class of share and you take more shares in the company that the pother shareholder. You agree that once a certain level of dividends has been paid out, the company could redeem the extra shares you have and cancel them. You would need to ensure that you had at least 51% of the shares to ensure that you could vote to distribute a dividend at your will.
Hi, Thank you. The option of issuing different classes of share is viable, but we had previously discussed that your partner would not be prepared to agree a circumstance where you had a preference over the dividends until you are repaid the equivalent of £93k? IAre you able to accept a scenario where you receive a higher dividend until the company is repaid? You can through different classes of share ring fence these assets (by create a class of share that has a preference on parts of the company's capital), but it will not ring fence them from the creditors - so what is the risk that this new business will create creditors that may wish to claim against these assets if you cannot pay them for some reason? Kind regards AJ
Hi, Is it a must that I would need to take out £93k first or it would be up my discretion and I could agree that Martin can get some dividends even before I take out full £93k?
If I were to retain 51% until the point £93k is paid off, could I then decide which shares get dividends paid off?
Thanks, ***** ***** should do the trick, right?
I would own 51 of Ordinary shares and 100 of A ordinary shares Martin will get 49 of Ordinary shares and 100 of B ordinary shares. On shareholders meeting we will then vote as needed to pay out more on shares A and less on shares B until such a point as shares A received £93k more than shares B.
Ok thanks, ***** ***** would it cost if you were to write it outside of this site?