Director appointment but zero dividends to date

Mr_Bigglesworth

Free Member
Aug 16, 2016
14
0
Hi

I run a very small business in which i am the Director and take monthly dividends (i also work full time salaried). In March i filled out a form on Companies House to appoint a new Director (my fiancée) and added them as a PSC with intention to issue dividends equally. I notified my accountant who told me that it wasn't as simple as that and i was given a name of a company that deals with director appointments and an 'referral code' which referenced the accountants company for a discount on rates.

So thinking that nothing was official, I minute a 'board of directors' meeting to state that the appointment was deemed invalid. I carried on issuing myself dividends with intention to register with the recommended company, or find an alternative.

Now in early October, I'm taking a look at my business finances in preparation of the upcoming tax returns. I have a sinking feeling that the registration of my fiancée as Director through Companies House website could be considered as valid and that any dividends paid monthly should have been split 50/50. So should the registration be considered valid, is there any way to catch her up on dividends paid to date? Or ideally, is there a way to edit the director appointment/PSC dates to a future date?

Mr B
 

Mr_Bigglesworth

Free Member
Aug 16, 2016
14
0
I only filled out the PSC01 form on companies house which didn’t really ask about any details of share holdings / class / amounts etc other than %. So I believe this is why the accountant said it’s not as simple as that and I realise that what I had done was to fill out the form but not go through the motions of issuing shares etc.


I wonder if I ask the accountant to redo the confirmation statement removing my fiancée as a PSC whether that will rectify the position and I can then go down the proper avenues.

My confirmation statement was issued two weeks after filling out the PSC01 form with just a ‘no update’
 
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Newchodge

Business Member
Nov 8, 2012
16,234
4,585
Newcastle
If you have not created new shares or given/sold some of your shares I can not see how your fiancée is entitled to any dividends, I would however look at what you have done ASAP and rectify anything, why are you making changes at CH and not your accountant?
Possibly because the accountant has referred the client to "a company that deals with director appointments and an 'referral code' which referenced the accountants company for a discount on rates.". Do you really need to pay someone to make a Director appointment? Possibly also because the acountant hasn't mentioned that only shareholders get dividends?
 
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Ian J

Factoring Specialist
Legacy Full Member
Nov 6, 2004
6,901
2,398
Midlands
factoringsolutions.co.uk
I have a sinking feeling that the registration of my fiancée as Director through Companies House website could be considered as valid and that any dividends paid monthly should have been split 50/50.

Dividends are payable to shareholders and not directors unless they are also shareholders so if you haven't given her any shares she isn't entitled to dividends
 
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pentel

Free Member
Mar 12, 2011
576
102
Possibly because the accountant has referred the client to "a company that deals with director appointments and an 'referral code' which referenced the accountants company for a discount on rates.". Do you really need to pay someone to make a Director appointment? Possibly also because the acountant hasn't mentioned that only shareholders get dividends?

I suspect the OP should be looking for a new accountant.
 
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Mr_Bigglesworth

Free Member
Aug 16, 2016
14
0
Thanks all :)

Not sure what possessed me to fill out the PSC01 form at the time, I was just generally checking the details held at companies house and the simplicity of doing it made me think it’s an easy detail to add. I’ll refrain from doing anything like that going forward! I’ll ask my accountant to reissue the confirmation statement removing my fiancée as a PSC and as suggested I’ll be looking for a new accountant.

I’m just glad I caught it now rather than at a much later date. Hopefully CH don’t punish me for the error, I have only been issuing dividends to myself so no financial oddities to untie.

cheers,
Mr B
 
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So thinking that nothing was official, I minute a 'board of directors' meeting to state that the appointment was deemed invalid. I carried on issuing myself dividends

From what @The Resolver has said around these forums, I understand that what is shown on companies house is not necessarily the legal position. As you have minuted that the appointment was invalid and therefore did not happen, I'm sure this would supercede the information on companies house and be the true position. If so, the only thing you need to do is correct the information on companies house.
 
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Whilst shareholding of more than 25% is the most common qualification, it is possible for your fiancee to be a PSC even without having shares. It is about influence over decision making.If you agreed that you would not make certain decisions without her agreement, e.g. whether to cease using software (which perhaps she developed and owned the IPR to) or you agreed to allow her to make significant decisions such as might qualify her as a "shadow director" then you would be required to declare her as a PSC. So maybe you prefer not to remove her as a PSC. But as has ben said above that does not entitle her to a share of dividends.

The statutory rule is set out in Schedule 1A to the Companies Act 2006 as amended by Schedule 3 to the Small Business, Enterprise and Employment Act 2015.
 
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Lisa Thomas

Business Member
Apr 20, 2015
3,897
554
OP - take care to understand the difference between director and shareholder. You appear to be mixing them up.
 
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