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Can you have different % ownership in brands under 1 Ltd Company?

Discussion in 'General Business Forum' started by TruthHunter, Oct 13, 2020.

  1. TruthHunter

    TruthHunter UKBF Newcomer Free Member

    14 1
    I have a limited company and at the moment three brands exist under this Ltd company.

    We are looking to start a new brand under the same Ltd company and hire someone to run it. This person isn't interested in % equity in the existing three brands, they want a bigger stake in the new brand we are setting up. Which is perfect for us too.

    So can I give this person 0% in the existing three brands and 25% in the new brand, all under one Ltd company?

    If so, how can I do this?

    Thanks in advance
     
    Posted: Oct 13, 2020 By: TruthHunter Member since: Jun 15, 2016
    #1
  2. PugwashEQ

    PugwashEQ UKBF Contributor Full Member

    34 11
    hi Truthhunter,

    the normal advice in these matters is to get good advice from a proper corporate lawyer- advice i would urge you to follow.

    They way I would do such a thing would be simple but a bit of faff to administer- You would setup 5 ltd companies. You have a TopCo (funnily enough, at the top :) ) which is the master ltd co- yYou own TopCo 100% as shareholder.

    TopCo owns 4 other Ltd Companies. Three are owned as "wholly owned" subsidiaries (ie TopCo owns 100% of the shares of each of these businesses), the 4th business is 75% owned by TopCo and 25% owned by the third party.

    In these scenarios You MUST MUST MUST MUST MUST MUST MUST MUST have a shareholders agreement. If you don't then under certain circumstances you will find the third party person has a huge amount of leverage (specifically i'm thinking of drag and tag rights under sale of a company- in this scenario, them owning 25% means you can't drag them without a shareholders agreement that specifies you can- I've seen this very scenario cost a client literally millions of pounds in price!).
    A shareholders agreement also specifies what happens if it all goes wrong and what happens if they want to leave early. You would probably want some sort of Good leaver/Bad leaver provision!
     
    Posted: Oct 13, 2020 By: PugwashEQ Member since: Sep 8, 2020
    #2
  3. STDFR33

    STDFR33 UKBF Big Shot Free Member

    4,506 1,193
    Shares are attached to the company, not the brands within it.

    You could have a different class of shares for paying out dividends with no voting rights.

    You could also set up another company, perhaps with the existing company holding the shares in the new company.

    You really need professional advice to get the structure right before it ends in tears.
     
    Posted: Oct 14, 2020 By: STDFR33 Member since: Aug 7, 2016
    #3
  4. Mark T Jones

    Mark T Jones UKBF Big Shot Free Member

    4,950 1,928
    Smple answer is yes, you can split shares in a subsidiary

    As you ae operating 4 businesses, you really shoud be getting dedicated professional advice on such matters.

    And, as @PugwashEQ has said, get a good shareholder agreement drawn up
     
    Posted: Oct 14, 2020 By: Mark T Jones Member since: Nov 4, 2015
    #4
  5. consultant

    consultant Your Business Community Staff Member

    5,692 804
    I think the simple answer is no, under your current setup.

    It would be simplest to set up a new company and give them x shares and your business has y shares.

    Or, have a sales agreement, where they do not own anything, but get an agreed % of profit in sales in the business (minus costs etc).

    As mentioned, you are probably best to get specific accounting advice, as I am sure there will be bits that are relevant that you haven't told us (or we really need to know!).
     
    Last edited: Oct 14, 2020
    Posted: Oct 14, 2020 By: consultant Member since: Jan 21, 2008
    #5
  6. Naheed Mir

    Naheed Mir UKBF Contributor Free Member

    90 7
    I will recommend to discuss it with some professional experts; they will give you a piece of professional advice. After discussing it with the experts, you need to have a shareholder's agreement.
     
    Posted: Oct 17, 2020 at 5:44 PM By: Naheed Mir Member since: Aug 10, 2020
    #6