Company Planning

[necman]

Hello everyone.

I wanted peoples thoughts on the following.

My wife and I are share holders in a ltd company - IT consultancy, have been going since 1988. Making steady profits, taking salary and divi's etc etc. The co has built up a cash fund, we have no debts.

Want to create another company for the purpose of property investment but need the share holders to be me and another person. But want to use the monies in first company as deposit for commercal investment.

I understand (I think) if I create a holding company, transfer shares from ltd computer company to holding company, the holding company then owns/has the cash that was in ltd company (shareholder funds). Then it makes a new subsidary called property invest ltd which has two directors (me and another), then it loans (at commerical rates) to the prop company. The prop company then does what it wants (b to let commerical). When profits are made, it will distirbute to shareholders who will be another and the holding company which I will have shares in.

Can anyone comment on this idea. good/bad/indifferent/experience/etc etc etc.

Thanks.

[Alpha]

Do you need the middleman???

Why not simply make the loan from the computer company to the property company?

[Strategist]

I would strongly suggest taking professional advice on something like this rather than expecting to get reliable free advice.

[thecus]

There are so many considerations to take into account here. For example with a holding company you have to produce group accounts which can be burdensome.

It would be possible for you to create the new company as a special purpose vehicle, thus it would not be necessary for you to create any new shareholdings.

I would reiterate what 'strategist' said, proper legal adivce on this matter is essential, even if costly

[cmcp]

I would strongly suggest taking professional advice on something like this rather than expecting to get reliable free advice.

It is important to realise the importance of the legalities, and although I think the same could be said for a lot of queries raised here, there's no harm in an interesting read.

I'm sure the advice would be taken as it's been asked for: comments on experience, good bad or indifferent.

[Moneyman]

watch out. one company cant just give loans to another except under certain conditions. get it checked out or you could be breaking all sorts of laws. Also why are you doing a limited company, this may not be the best way to go about this. ask an accountant.

[xkv]

watch out. one company cant just give loans to another except under certain conditions. get it checked out or you could be breaking all sorts of laws. Also why are you doing a limited company, this may not be the best way to go about this. ask an accountant.


Interesting comments but would you care to elaborate please?