Director Resignation and Return of Share

[Wilson1973]

[FONT=&quot]Hi,

I wonder if someone can give me some help or advice on the resignation of a director.

Background; we are a limited company with two directors - formed in 2006.

Resignation; one of the directors wishes to step down and resign.

We both have 50 ordinary shares in the company, he is happy to sign these over to me for no financial gain.

Am I correct in assuming he completes the following forms:

Form 288b director resignation.
Form 88(2) return of allotted shares (or should the now be form sh01).

Questions:

Is there any additional forms he needs to complete?
Is there anything I need to do to now this is a single director company?

Thanks for looking and cheers in advance for any advice.[/FONT]

 

[BuckworthSolicitors]

Hi

To resign the director, file a Form TM01. I would suggest that the director also sign a standard form resignation letter which confirms that he has no rights against the company as a result of his resignation - theoretically, there are arguments that he could have a redundancy claim or a claim under the standard indemnity often found in the articles.

If you want to transfer the shares, you need to execute a stock transfer form at the very least. Transfers of shares don't have to be disclosed to Companies House until the next annual return is due. If there is value in the company, I would suggest a very basic share transfer agreement containing title warranties etc.

If there is value in the company, I would suggest running the transaction past your accountant as there are potentially some tax issues.

If you have any further questions, please feel free to PM me.

Kind regards

Mike

 

[Wilson1973]

Thank you for your advice.

I guess you are talking about form SH01 to return shares.

What would happen to those shares id the director resigned and did nothing else. Would he still be entitled to the value of those shares or would they cease to exist ?

Just wondering whether there is a need to anything other than resign.

To answer the question there is no real value in the company.

 

[BuckworthSolicitors]

To clarify there is a distinction between transferring shares and the company buying them back. If the shares are transferred, he would "sell" them to you. You would then own the shares. If the company buys them back, the shares would either sit "in treasury" meaning that they would be owned by the company or would be cancelled.

If he resigned as director but retained the shares, he would remain the owner of the shares and would (assuming the shares are ordinary shares) be entitled to receipt of any dividends and distributions of capital including on the company being wound up. He would also be entitled to vote at a general meeting of the company.

If you want to remove him permanently from all involvement in the company, he needs to resign as a director and transfer his shares to you.

The stock transfer form isn't an SH01; that is something different. It is a J30 which can be found at this link http://www.sfsgo.com/documents/J30.pdf

Kind regards

Mike

 

[Wilson1973]

Brilliant thank you very much for your help and advice.

 

[lesliedocherty]

but remember if he went bankrupt, the insolvency person could come back and claim the shares.

 

[Alan R Price]

but remember if he went bankrupt, the insolvency person could come back and claim the shares.

But only if:

(a) the shares were transferred for materially less than their proper value; and
(b) the transfer took place within five years before he became bankrupt; and
(c) he was insolvent at the time of the transfer or became insolvent as a result of it if it took place more than two years before he was made bankrupt.

Is there any risk he will go bankrupt?