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JGM
JGM, Solicitor
Category: Law
Satisfied Customers: 12534
Experience:  30 years as a practising solicitor.
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I need to set up a limited company to buy the lease of a

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I need to set up a limited company to buy the lease of a public house, I want to put a friend of mines name on the company somehwere but as he is on benefits I don't want it to affect his income. He will not be putting any thing into the company or receiving any financial gain from it. Is there a way to do this?

Are you making him a director, shareholder or both and why?

Customer: replied 3 months ago.
Iam not sure which title to go for, Iam doing it so he has some security there is a house along with the pub that him and his mum are moving into, they will be renting it (he is a full time carer for her) and will continue to do so whilst she is still alive but eventually he will be coming into the business with me. Only then will the benefits situation change as he will be earning a wage.

If he isn’t investing in the business at the moment or being employed I wouldn’t do either. Let him occupy the house under a lease and wait until he has something to contribute to the business before giving him a directorship or shares. There is no good reason for doing otherwise. I hope that helps. Please leave a positive rating so that I am credited for my time.

Customer: replied 3 months ago.
It doesn't help no! What I wanted to know was if I give him shares or make him director will doing that affect the benefits he is on (Income support and a Carer's Allowance) if he isn't getting any financial gain from the company?

If you give him shares of course it will, as he will obtain a capital interest in the business. A directorship will not automatically give him a financial interest in the business but it would give him certain powers of management and control and it would be, frankly, unwise to make anyone a director that wasn’t contributing to the business.

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Customer: replied 3 months ago.
Many thanks for that