Adding a shareholder to a limited company

[computerbeing]

Dear All,

I would appreciate any advice on the following. There is a limited company with a sole director and shareholder. The director wants to give a portion of the company (say 30%) to another person, but does not require any money for this. Just the expertise of that person. The company is trading for few years and has an income of about £200k. Is that something that happens or is it a must for the director to make a valuation of the company's worth and exchange the shares with money.

 

[WaveJumper]

Just to clarify is the sole director the 100% shareholder

 

[computerbeing]

Yes that is correct. Thank you

 

[WaveJumper]

Have a read of this
https://www.thejoyofbusiness.co.uk/how/how-to-give-shares-in-your-business/

 

[UK Contractor Accountant]

Wouldn't be easier to just to issue more shares - separate class of shares with voting rights?

That way you avoid any CGT issues and can also pay separate rate of dividend per share class.

 

[Chris Ashdown]

Before you do anything talk to a solicitor and get a Shareholders agreement draw up prior to issuing or giving away any shares

 

[Ozzy]

Just to through another option out there, if this other person is an employee and you want them to remain on board...look into Share Options.

 

[Adam93]

There are numerous tax issues to consider. Firstly, you will need to enlighten us as to who will be receiving the shares and their relationship with the business.

If they do not pay anything (or pay below market value) and they are not a family member, then the employer relates security rules are likely to apply.

 

[eatcookies]

Wouldn't be easier to just to issue more shares - separate class of shares with voting rights?

That way you avoid any CGT issues and can also pay separate rate of dividend per share class.

why voting rights? if the new shareholder wants to have dividends, shouldn't he also get dividends rights?

 

[Spur Support Services]

Sometimes what seems like a simple idea can dig you into a very big hole.

Talk with someone with knowledge of a wide variety of taxes to ensure that all aspects of this generous offer are considered from the perspective of both yourself and the recipient(s).