New Company - PSC vs Directors vs Shareholders

[IDoIT]

Hi guys,

Just want to make sure we register a UK ltd co in the right way.

Company A has 4 UK directors who also are equal shareholders and are all registered as PSC.

Company B is proposed to be formed with 90% shareholding owned by Company A, with 10% shareholding owned by a single director based overseas.

At the moment, only the 10% owner is listed as a director of Company B, while Company A (which will be operationally in charge of Company B) is only down as a Shareholder and PSC.

Is this the right way given Company A needs ultimate say on how this entity is being run? Only the shareholding split should be 90/10.

Thanks in advance

 

[Daybooks]

Hi guys,

Just want to make sure we register a UK ltd co in the right way.

Company A has 4 UK directors who also are equal shareholders and are all registered as PSC.

Company B is proposed to be formed with 90% shareholding owned by Company A, with 10% shareholding owned by a single director based overseas.

At the moment, only the 10% owner is listed as a director of Company B, while Company A (which will be operationally in charge of Company B) is only down as a Shareholder and PSC.

Is this the right way given Company A needs ultimate say on how this entity is being run? Only the shareholding split should be 90/10.

Thanks in advance

If Company B is proposed to be formed then the stated 10% shareholder of A cannot be a director of B as B does not exist.

The shareholders own the company and the directors run it for them. The shareholders therefore need to ensure they control a majority of directorships to ensure their wishes are met. However there are (potentially) shareholder agreements to consider as well as minority shareholding rights and protection. A legal expert may be able to give clearer information on this.

 

[japancool]

What involvement will the 10% shareholder have? Do they actually need to be a director at all?

 

[IDoIT]

Thanks guys.

So to clarify.

Company B has been made, with the current director being Shareholder of 10%.

The truth should be that the entity Company A should be the sole directorship of Company B, with the shareholders being 90% Company A and 10% Shareholder

 

[japancool]

The 10% shareholder probably doesn't need to be a director, but instead is only needed as a shareholder in fairness as they don't need to be involved day to day.

In which case, just make him a shareholder. That will achieve what you are after.

 

[Newchodge]

Thanks guys.

So to clarify.

Company B has been made, with the current director being Shareholder of 10%.

The truth should be that the entity Company A should be the sole directorship of Company B, with the shareholders being 90% Company A and 10% Shareholder

A company cannot be a director. A director must be a person.

 

[IDoIT]

In which case, just make him a shareholder. That will achieve what you are after.

Thanks - makes sense, but to comply with the below we might just keep him on as director and list the other director as Company A

A company cannot be a director. A director must be a person.

That is not what I'm seeing here... Is this not correct?

Role and duties of a company director

Read our guide to understand the duties of a limited company director, how many directors a company can have, and who can and cannot hold this position.

www.1stformations.co.uk

Who can and cannot be a company director?​

A company director can be a person or a corporate entity, such as a group, partnership, organisation, charity, firm, another limited company, and any other form of corporate body. However, a company must always have a minimum of one natural director at all times.

 

[japancool]

Thanks - makes sense, but to comply with the below we might just keep him on as director and list the other director as Company A

Why not nane one of the other directors of Company A as a director?

 

[Newchodge]

In which case, just make him a shareholder. That will achieve what you are after.

Company B still needs at least 1 director.

 

[Newchodge]

Thanks - makes sense, but to comply with the below we might just keep him on as director and list the other director as Company A

That is not what I'm seeing here... Is this not correct?

Role and duties of a company director

Read our guide to understand the duties of a limited company director, how many directors a company can have, and who can and cannot hold this position.

www.1stformations.co.uk

Who can and cannot be a company director?​

A company director can be a person or a corporate entity, such as a group, partnership, organisation, charity, firm, another limited company, and any other form of corporate body. However, a company must always have a minimum of one natural director at all times.

You need at least 1 human director. If there are no other human directors there will be difficulties.

 

[The Resolver]

Just to clarify, a limited company can be a Director of another company but only so long as there is also at least one human Director.

If the objective is to ensure Company A has full control over Company B then that company should be appointed as Director. However as that would not give Company A control, only the ability to block a resolution of the other Director.In any event the human Director could bind the company to contracts even without formal approval of the Board.

There MUST be a Shareholder Agreement in both companies to nail down the rule book. especially as to how decisions are taken by Company A as Director of Company B, who attends Company B board meetings etc etc.

The only way to give good advice is by firstly understanding the reality of the relationships and reasons for this initial plan. Is the 10% of Company B person an investor. You are welcome to PM me with the context and backgrund details and objectives, I can then advise further.