Dividing shares - limited company - active not trading

[TurnerW]

Hi everyone, I don't seem to be able to get an easy answer to this one from googling.
I have a limited company with 100 shares value £100. I would like to use it to launch a new service. I have 2 biz partners and want to give them 10% each. I've made them Directors without issue.
Do I have to give back 20% of my shares to be able to issue them 10% each?
I've tried doing to webfiling form, but it's not clear if its adding another 20% of total shareholding (120) or automatically taking 20% off of my shares.

Anyone does this?

Thanks


W

 

[MyAccountantOnline]

Hi everyone, I don't seem to be able to get an easy answer to this one from googling.
I have a limited company with 100 shares value £100. I would like to use it to launch a new service. I have 2 biz partners and want to give them 10% each. I've made them Directors without issue.
Do I have to give back 20% of my shares to be able to issue them 10% each?
I've tried doing to webfiling form, but it's not clear if its adding another 20% of total shareholding (120) or automatically taking 20% off of my shares.

Anyone does this?

Thanks


W

Do you currently own 100 £1 shares in your existing company?

If it's a new venture would it not be better/easier for the 3 of you to set up a new company?

 

[TurnerW]

I do own 100 x £1 shares currently. Yes it might be easier, however I'm not sure how complicated it is to split the shares as yet. Can it be done online or do I need a solicitor?

 

[MyAccountantOnline]

I do own 100 x £1 shares currently. Yes it might be easier, however I'm not sure how complicated it is to split the shares as yet. Can it be done online or do I need a solicitor?

It can be done but do you really want to give away part of an existing business?

Setting up a new company yourself for the 3 of you will cost £50 it'll be alot quicker, easier and cheaper.

 

[TurnerW]

It can be done but do you really want to give away part of an existing business?

Setting up a new company yourself for the 3 of you will cost £50 it'll be alot quicker, easier and cheaper.

Its currently a zero value business, it hasn't traded yet. It's not a cost thing, just that I thought it would be easier to rearrange the share on the existing biz rather than register another new one.

 

[MyAccountantOnline]

Its currently a zero value business, it hasn't traded yet. It's not a cost thing, just that I thought it would be easier to rearrange the share on the existing biz rather than register another new one.

In that case if you are unsure of how it's done I do advise seeking professional help.

 

[ARB]

Hi everyone, I don't seem to be able to get an easy answer to this one from googling.
I have a limited company with 100 shares value £100. I would like to use it to launch a new service. I have 2 biz partners and want to give them 10% each. I've made them Directors without issue.
Do I have to give back 20% of my shares to be able to issue them 10% each?
I've tried doing to webfiling form, but it's not clear if its adding another 20% of total shareholding (120) or automatically taking 20% off of my shares.

Anyone does this?

Thanks


W

You could give or sell them some of your shares, or issue new shares in which case, any money paid for them will go to the business not yourself (although I don't think you're looking to charge for them). You could also offer them stock options of you set up a scheme. It might be best paying a professional to do this though so it's done properly and thought out strategically and from a tax perspective.

Alan

 

[WaveJumper]

There is a fairly straight forward process details can all be found on companies house

Make changes to your private limited company

Making changes to your company - passing resolutions, changing addesses and where your records are kept, your company name and type, directors' and secretaries' details, share structure, constitution

www.gov.uk

However do you just want to give them 10% of “normal” shares, do you want them to have full voting rights, are they contributing funds to the company, do you want them to get dividends. Think this through carefully before going ahead. And please make sure you get a proper shareholders agreement in place don’t just rely on downloading something off the internet.

And this is where I say get some proper legal advice on setting all this up, because and unfortunately (you only have to read the many UKBF posts on this topic ) when the falling out begins you will wish you had.

A chat with our forum member @theresolver might be a good idea

 

[Porky]

Maybe I'm missing something here but this is very straight forward. IF you are saying the ltd company has 100 A class shares at £1 in your name and you want the other two newly appointed directors to own 10% each of the company then the simple answer is to issue 100 new shares in the company at £1 so your share capital becomes £200 (200 at £1) and of those new shares issue 60 to you and 20 each to both directors. They then own 10% each of the share capital and you are still the PSC with 80% control.

Now if it is you don't want them to have dividends or voting rights you could issue the 60 to you as A class with full voting and dividend rights and 40 B class to them and stipulate no dividend or voting rights on the B class shares.

Steps are these three filings at companies house:-
1. Resolution of allotment of securities: As the two others are directors already you need to pass a resolution confirming the proposed allotment of 100 new shares of £1 and the class and the split and all the directors each sign to pass the motion. You can attach the proposed shareholder schedule for the new shares.
2. Resolution: As you are the current 100% shareholder you need to sign a resolution confirming your agreement as shareholder to issue the new shares. Again you can attach the proposed shareholder schedule. Then issue the three new share certificates.
3. SH01 - Statement of capital following allotment of shares £200 - this form filed increasing your share capital to £200
You would then later need to file your updated confirmation statement with the updated total shareholder list. i.e you 160 shares / person a 20 shares / person b 20 shares.

Of course you could use a solicitor to prepare your resolutions to file at companies house and the SH01 but to be honest i do all my own, its not difficult but if you are new to this and unsure then ask what they want to charge you, it not a big job.

Also, if you do above get each of you to pay the money from each for the shares into the business so that you have a record of the transaction. You don't want the revenue coming at your years down the line if you come to sell the stock and claiming the shares were gifted.

Finally, is a shareholder agreement, again if you are new to this use a solicitor. As @WaveJumper jumper stated this is where you could have future disputes between the three of you but as you still have 80% control there is not a lot they can do IMO, with 80% you can practically pass whatever resolutions you like in the future.

If you don't want to use a solicitor message me and i can point you to some resolution wording filing examples. Hope my reply helps.

Good luck

 

[Daybooks]

Maybe I'm missing something here but this is very straight forward.

You are not missing anything at all. It is amazing what you can find about the necessary procedures with a read of the relevant sections of the Companies Act.

 

[TurnerW]

Maybe I'm missing something here but this is very straight forward. IF you are saying the ltd company has 100 A class shares at £1 in your name and you want the other two newly appointed directors to own 10% each of the company then the simple answer is to issue 100 new shares in the company at £1 so your share capital becomes £200 (200 at £1) and of those new shares issue 60 to you and 20 each to both directors. They then own 10% each of the share capital and you are still the PSC with 80% control.

yes @Porky this is exactly it. Thanks!
I thought I could return 20% of my shares then issue them 10% each, but your plan does the exact same thing. Can I do that using webfiling? I would appreciate the wording for resolution filing. I know this all seems a bit odd, but I'm bidding for something that is way above my station, one of the requirements is to have the company structured 'just so' and they will check companies house. If lucky enough to win the bid, then I can back fill everything else before any money changes hands, contracts signed etc. If I don't win the bid then I can close the company and move on without having spent to much up front.