Shares - help please

[elaine@cheapaccounting]

Probably one for the other accountants on here but happy to receive sensible suggestions for anyone

I have a client who for various reasons wants to give someone a 'stake' in their business but does not want them to receive dividends.

Any ideas on how best to set this up (it is a limited company).

Thanks for replies

 

[Zeno]

It would seem to be a case of creating a new class of shares. It will take some fine tuning to achieve the correct balance of voting rights etc but no right to dividends.

You could also perhaps have a new shareholders agreement where the new party agrees to waive his rights to dividends in perpetuity although I will admit that I am unsure if this is legal.

 

[Blackberry]

If they have a stake in the business but receive no dividends what are the benefits to them?? :|

there seems little point in being given a slice of nothing? unless I've missed something and they are buying into the business? but again if this is the case what benefit are they receiving?

The usual set up is to create a new share category e.g. ordinary 'B' shares with different voting and dividend rights. That way the 'A' shareholders can control the business and decide when and if a dividend is paid to the 'B' shareholders

 

[elaine@cheapaccounting]

If they have a stake in the business but receive no dividends what are the benefits to them?? :|

As I said there is a good reason for this - easy to work out really!!!

 

[Blackberry]

As I said there is a good reason for this - easy to work out really!!!

Its early in the day and its very hot in our office, can't you just enlighten me?!

 

[Alpha]

If they have a stake in the business but receive no dividends what are the benefits to them?? :|

there seems little point in being given a slice of nothing? unless I've missed something and they are buying into the business? but again if this is the case what benefit are they receiving?

Depending on exactly what the new shares rights are they may receive a share of the (increased) capital value of the business on exit but not currently want income due to their current tax situation.

 

[elaine@cheapaccounting]

Depending on exactly what the new shares rights are they may receive a share of the (increased) capital value of the business on exit but not currently want income due to their current tax situation.

Great minds think alike - we are sooooo made for each other

 

[Zeno]

Great minds think alike - we are sooooo made for each other

I thought you were into David G?

The way you are heading you will have Alpha & David fighting in the carpark after a CPD event.

 

[elaine@cheapaccounting]

I thought you were into David G?

The way you are heading you will have Alpha & David fighting in the carpark after a CPD event.

would sooooo like to see that one

 

[David Griffiths]

Fight in the car park? And after a CPE event! I'd be mentally destroyed before I even started. :redface:

It's more my style to agree to meet at dawn with our laptops and send nasty emails to each other!

 

[Zeno]

Fight in the car park? And after a CPE event! I'd be mentally destroyed before I even started. :redface:

It's more my style to agree to meet at dawn with our laptops and send nasty emails to each other!

We could come up with some sort of accouting contest. The first one to reconcile the bank wins the right to woo the fair lady?

Although I dare say Elaine would prefer you two to beat each other to a bloody pulp/

 

[David Griffiths]

How undignified.

Surely the first one whose articled clerk reconciles the bank should be the winner!

 

[elaine@cheapaccounting]

Firstly - thank goodness it is an accounting and not a spelling contest.

accouting contest

Secondly at least get them to do someone useful like a CT comp.

Thirdly - where is the fair lady :|:|

And finally - I expect they would both fight like girls anyway

 

[elaine@cheapaccounting]

How undignified.

Surely the first one whose articled clerk reconciles the bank should be the winner!

And which century are you living in :|:|

 

[Zeno]

Firstly - thank goodness it is an accounting and not a spelling contest.

accouting contest

Secondly at least get them to do someone useful like a CT comp.

Thirdly - where is the fair lady :|:|

And finally - I expect they would both fight like girls anyway

It's not the spelling, it's the typing. I may have some of yesterdays lunch trapped in the keyboard.

I was thinking that because David is a tax specialist and Alpha a management accountant we would have to find something for them to do that would offer no unfair advantage.

Good luck to both of them though.

 

[accountancyextra]

Articled Cerk?????

David, time has been kind to you as you don't look over 100 years old