Setting up LTD company with 50/50 share..

greyteam1959

I would seek proper professional advice before this come back to bite your *ss bigtime.

paddyrg

My only addition is are you *certain* you want *exactly* 50/50 split? It can lead to deadlocks. Even if you give one share (class which won't receive dividends) to someone you both trust to arbitrate and take 49 each - at least you have someone to stop deadlocks.

bowlingo

paddyrg wrote: »

My only addition is are you *certain* you want *exactly* 50/50 split? It can lead to deadlocks. Even if you give one share (class which won't receive dividends) to someone you both trust to arbitrate and take 49 each - at least you have someone to stop deadlocks.

Hello paddy..

Yes definitely looking at a straight down the middle 50/50 split..I apreciate it can cause problems regarding decisions etc...I have no problem setting it up as a 50/50 thing as long as we are both fully 50/50 liable and not sure if this is actually possible....

paddyrg

As a limited company the company is liable, not the shareholders. Directors can become liable if they are negligent in their duties, but they are not otherwise normally liable for company debts, etc. This is why I'm anxious that you're pushing into this without a full understanding of what you're setting up.

Also, understand that if you were jointly and severally liable for debts say in a partnership, it doesn't mean you're both liable for 50% of a debt, you're both responsible for 100% of it. The creditor can come after both or either of the parties for the full amount (usually the one most likely to pay).

What exactly are you trying to achieve and why? You should take advice from an accountant regarding company formation and a lawyer regarding liabilities and getting the structure you want, but at the moment I'm just concerned that you have a mistaken assumption which might lead you down the wrong path.

Funky_Bold_Ribena

I don't think the OP has got a clue about what they are trying to do.

earthstorm

A director will be liable for the amount they hold in shares, (shares are usually valued at £1) when you set up a limited company, so if you only hold 1 share then you are liable for £1 and that's all.
A director is an employee of the Limited Company.

Savvy_Sue

earthstorm wrote: »

A director will be liable for the amount they hold in shares, (shares are usually valued at £1) when you set up a limited company, so if you only hold 1 share then you are liable for £1 and that's all.
A director is an employee of the Limited Company.

Notwithstanding this, I'm with paddy in suggesting that the OP should get proper (ie paid for) advice which he can rely on if he feels he has more to lose than his partner / fellow director.

earthstorm

Savvy_Sue wrote: »

Notwithstanding this, I'm with paddy in suggesting that the OP should get proper (ie paid for) advice which he can rely on if he feels he has more to lose than his partner / fellow director.

Yes i would agree as the way he is posting, he does not fully understand business entities and where liabilities lie.

what i listed is the info i received when i set up a limited company (although i am the only director)

Atidi

Funky_Bold_Ribena wrote: »

I don't think the OP has got a clue about what they are trying to do.

Oh, I think they know exactly what they are doing ... and probably having a right giggle to themselves too :cool:

greyteam1959

paddyrg wrote: »

As a limited company the company is liable, not the shareholders. Directors can become liable if they are negligent in their duties, but they are not otherwise normally liable for company debts, etc. This is why I'm anxious that you're pushing into this without a full understanding of what you're setting up.

Also, understand that if you were jointly and severally liable for debts say in a partnership, it doesn't mean you're both liable for 50% of a debt, you're both responsible for 100% of it. The creditor can come after both or either of the parties for the full amount (usually the one most likely to pay).

What exactly are you trying to achieve and why? You should take advice from an accountant regarding company formation and a lawyer regarding liabilities and getting the structure you want, but at the moment I'm just concerned that you have a mistaken assumption which might lead you down the wrong path.

As I said..................