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Buachaill, Barrister
Category: Law
Satisfied Customers: 10949
Experience:  Barrister 17 years experience
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We have owned a private limited company since 16th October

Customer Question

We have owned a private limited company since 16th October 2003. There are currently 2 shareholders both owning 50%. We both have spouse's who work part time. Can we set up a new share class with a 50% holding by each spouse and then distribute dividends to them. Neither of them work in the company and have not invested any capital in the business.
Submitted: 1 year ago.
Category: Law
Expert:  Buachaill replied 1 year ago.

1. It is perfectly permissible for you to set up a new Class of shareholders who are your spouses and to distribute dividends to them. This can be a category of preferred shareholder who have the right to participate in dividends. This is perfectly permissible under the Companies Act. There is no requirement that any shareholders of a particular class have to be involved in a company. Nor do dividends have to be distributed to management. So, this is a valid arrangement in law.

Expert:  Buachaill replied 1 year ago.

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