Share Capital.... need advice please

[tire1]

Hi there,
a friend of mine opened a ltd company with share capital of £30,000 (£1each share).
The compnay traded for over 2 years and made about £10,000 profit which was added to its share capital.
Now he intends to wind up the company. After paying all taxes, he has about £35000 in bank.
How can he take the money? What exactely does he needs to do to take the money out.
any help is appreciated.

 

[Scalloway]

With that amount of money he is best to get a liquidator to wind the company up.

 

[tire1]

Thanks Scalloway.
The company has no liabilities and no creditors. Does he still needs to involve a liquidator?

To get an idea, how much liquidator costs?

 

[john1989]

You need must use a liquidator if the capital distribution is in excess of £25,000.

MVL Online so this for about £2k including disbursement a but expect a lot of the leg work to have been done.
Other firms will charge in the region of £4-5k.
@Lisa Thomas may be able to give a better indication of fees though.

 

[David Griffiths]

It's possible to avoid the use of a liquidator in these circumtances. You need to carry out a capital reduction to reduce the share capital from £30,000. That requires a declaration of solvency from the directors, but the funds returned (from non distributable reserves) are capital in the hands of the shareholders. If you reduce the capital to £3,000, then the distribution on winding up is now less than £25k so you can simply strike off.

Much cheaper than involving a liquidator

 

[tire1]

Thanks David,whats effects the declaration of solvency from the directors Will have on directors? On their credit history, being director in other company or setting up a new company in future?

 

[Scalloway]

The declaration of solvency is in respect of the company directors declaring that the company can pay all its debts. It is not a personal declaration.

 

[UK Contractor Accountant]

Would you bother with the Capital Reduction as HMRC have announced that they will not seek to collect illegal distributions via the bona vacantia rule on share capital of any size - previously £4K.

 

[Chris Ashdown]

Did they actually buy the £30,000 shares i.e. actually pay the company for them and it shows in the bank accounts or is the money in the shareholders loan account

 

[tire1]

when he set up the company about 4 years ago, he issued 30,000 shares (£1each).Hence got a share capitAl of 30K

 

[Chris Ashdown]

Yes but did he buy them and put the thirty grand into the company bank account, you can have a company with 30,000 shares but only one issued and paid for. shares can be issued but not paid for and show up as the money owed

 

[David Griffiths]

Yes but did he buy them and put the thirty grand into the company bank account, you can have a company with 30,000 shares but only one issued and paid for. shares can be issued but not paid for and show up as the money owed

The OP says that there is £35k in the bank, and they made about £10k profit before taxes. That strongly suggests that the shares were fully paid for