Buying a limited company

[haveadeal]

I have a general question on buying a limited company. I am due to take over this company in July and the seller has just asked me to open up a new bank account as they have been told that thay cannot transfer their account over to me (the account is in the name of the limited company) I thought that when you took over a limited company that it was the company that owned the bank account not one of the directors. I would be greatfull if you could help.

Many thanks....L

 

[taxattack]

I have a general question on buying a limited company. I am due to take over this company in July and the seller has just asked me to open up a new bank account as they have been told that thay cannot transfer their account over to me (the account is in the name of the limited company) I thought that when you took over a limited company that it was the company that owned the bank account not one of the directors. I would be greatfull if you could help.

Many thanks....L

Are you buying the shares of the company, or the assets? If the shares, then yes, the bank account comes with the company. Of course the signatories will need to be changed.

Have you done plenty of due diligence, so that you know exactly what you are buying, and any nasties that may be lurking? Is it Vat registered?

Chris

 

[elaine@cheapaccounting]

The legal agreement will set out what you are buying etc.

I would not buy a business / company without this as you do not know what you may inherit e.g. debts, disputes etc.

You solicitor will then advise on new bank accounts etc

Good luck

 

[haveadeal]

Yeah, we are buying the shares in the company and we gave completed the due diligence, seen all the books and signed the contracts. It was just a last minute thing that the seller came up with. We had assumed that the bank account came with it as normal. The seller said that they had spoken with the bank to inform them and the bank siad it was ilegal to sell the bank account, I am not convinced they asked the correct questions.

We thought that we just signed mandates and became signatories and then removed the seller from the signatory list.

We have asked the seller to provide us with the mandates and we will sort out the rest. I think that they thought that they could keep the account and use it for another business.

Thanks for you help so far.

Talk soon....L

 

[Tom McClelland]

You cannot "sell a bank account". But in this case the bank account is the property of the limited company (or it ought to be), so when you buy the limited company the bank account remains the property of the company that you now own. It should just be a matter of getting the signatories changed and the previous owners should co-operate with that before surrendering office.

(If for some reason they feel unable to do that I'd seriously wonder what other nasties are lurking to be discovered once the deal is complete)

 

[Philip Hoyle]

I'm not too worried that something fishy is happening. For the smallest of companies where the directors and shareholders are the same, the banks may want personaly guarantees and most will "vet" the directors before giving a bank account. I would expect the bank to want to vet the proposed new directors/shareholders before agreeing to transfer the bank account. It is more than just transferring the signatories, especially with money laundering regs etc as the bank have to "know" and "prove" who the controlling parties are. I'd talk to the bank yourself and seek advice from your accountant and solicitor to move this forward. As I said, I don't think there is anything dodgy - probably more a matter of misunderstandings between the existing owners and probably a poorly trained bank employee, but it wouldn't hurt to get the accountant and solicitor to recheck their due-diligence and the contract to make sure that you've got warranties against any unknown nasties.