Having the wife as company secretary
Discussion
Jockman said:
youngsyr said:
That's interesting, what's the definition of a "frivolous shareholding"?
I meant the £5k divi allowance - my wife has a salary and savings income, but no dividend income.
We were advised that HMRC would not challenge 8%.I meant the £5k divi allowance - my wife has a salary and savings income, but no dividend income.
youngsyr said:
Jockman said:
youngsyr said:
That's interesting, what's the definition of a "frivolous shareholding"?
I meant the £5k divi allowance - my wife has a salary and savings income, but no dividend income.
We were advised that HMRC would not challenge 8%.I meant the £5k divi allowance - my wife has a salary and savings income, but no dividend income.
Perhaps the reasoning by HMRC was to help protect minority voting rights? I would need to look through emails from 2011 to see.
Also, make the dividend payments irregular. Try to avoid set patterns.
DonkeyApple said:
I believe that what is best avoided today re alphabet shares is not giving them voting rights.
But that's easily avoided too.Let's say I own 99 Class A shares at £1 nominal value each and at the time of issue they are the only shares in existence, I therefore own 100% of the company.
After a year I issue 1 Class B share at £1 nominal value to my wife. It has pari passu rights to the Class A shares. My wife owns the only Class B share in existence.
Now let's say the company makes £100k profit in the year.
There is absolutely nothing to stop me declaring a £50k dividend for each share class, meaning my wife gets £50k and I get £50k, despite me owning 99% of the company and my wife only owning 1%.
youngsyr said:
DonkeyApple said:
I believe that what is best avoided today re alphabet shares is not giving them voting rights.
But that's easily avoided too.Let's say I own 99 Class A shares at £1 nominal value each and at the time of issue they are the only shares in existence, I therefore own 100% of the company.
After a year I issue 1 Class B share at £1 nominal value to my wife. It has pari passu rights to the Class A shares. My wife owns the only Class B share in existence.
Now let's say the company makes £100k profit in the year.
There is absolutely nothing to stop me declaring a £50k dividend for each share class, meaning my wife gets £50k and I get £50k, despite me owning 99% of the company and my wife only owning 1%.
I was advised recently to include voting rights in the issue of alphabet shares as it was something the HMRC were focusing on.
DonkeyApple said:
youngsyr said:
DonkeyApple said:
I believe that what is best avoided today re alphabet shares is not giving them voting rights.
But that's easily avoided too.Let's say I own 99 Class A shares at £1 nominal value each and at the time of issue they are the only shares in existence, I therefore own 100% of the company.
After a year I issue 1 Class B share at £1 nominal value to my wife. It has pari passu rights to the Class A shares. My wife owns the only Class B share in existence.
Now let's say the company makes £100k profit in the year.
There is absolutely nothing to stop me declaring a £50k dividend for each share class, meaning my wife gets £50k and I get £50k, despite me owning 99% of the company and my wife only owning 1%.
I was advised recently to include voting rights in the issue of alphabet shares as it was something the HMRC were focusing on.
youngsyr said:
DonkeyApple said:
youngsyr said:
DonkeyApple said:
I believe that what is best avoided today re alphabet shares is not giving them voting rights.
But that's easily avoided too.Let's say I own 99 Class A shares at £1 nominal value each and at the time of issue they are the only shares in existence, I therefore own 100% of the company.
After a year I issue 1 Class B share at £1 nominal value to my wife. It has pari passu rights to the Class A shares. My wife owns the only Class B share in existence.
Now let's say the company makes £100k profit in the year.
There is absolutely nothing to stop me declaring a £50k dividend for each share class, meaning my wife gets £50k and I get £50k, despite me owning 99% of the company and my wife only owning 1%.
I was advised recently to include voting rights in the issue of alphabet shares as it was something the HMRC were focusing on.
DonkeyApple said:
...but I was guided that the practice of issuing alphabet shares without any voting rights should be avoided going forward.
Correct. We stick to the 8% with full voting rights.As an aside, always good to ensure your Articles of Association are in line with the Shareholders Agreement. Most are not but it is straightforward to amend.
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