Stock transfer to a limited company..

[rob900]

I would be grateful for some advice on this matter.
40% of our (limited) company shares are held by a retired director - the remainder being held by the other 2 directors.
Part of the retiring directors arrangement was that the company would buy back his shares over a period of 4 years - this to be done by monthly direct dedit.
At regular intervals these shares would then be officially transferred to the company.
We are now at a stage where this process needs to take place but are not sure which form to use.
Stock Transfer Form CON40 implies that shares are to be trasferred to individuals rather than a company. Could anyone advise if this is the correct one to use.
Many thanks
Rob

 

[mookgirluk]

Hi if a company is buying back it's own shares then this cannot be dealt with as a share transfer.

Instead it has to be treated as a reduction of issued capital (also known as purchase of own shares).

See guidance at Companies House for more info http://www.companieshouse.gov.uk/about/gbhtml/gba6.shtml (Section 6)

But in brief

"From 1 October 2008, a private company can reduce its issued capital by special resolution supported by a solvency statement. This is a new process of capital reduction under the Companies Act 2006 and is only applicable to private companies. A company must deliver to Companies House-

• A copy of a special resolution authorising the capital reduction
• A copy of the solvency statement made in accordance with sections 642(1)(a) and 643 Companies Act 2006
• A memorandum of capital
• A statement of compliance by the directors"

If this isn't something you feel comfortable with doing yourself then have a look at Jordans. They can provide you with all the documents you need and deal with Companies House for you.

http://www.jordans.co.uk/corporatelegalservices/reductionofsharecapital.html

 

[rob900]

Many thanks for your response. I will follow up your links.

 

[rob900]

Might it make it simpler if we simply had the shares transfered to the other directors rather than the company. The end result will be the same after the 4 year period - as this is not an excercise is deliberately trying to reduce issued capital but to redistribute it. I'd guess this may have tax implications though...