Setting up a limited company

adronocus

Hello

I need some help please with a limited company that we are looking to set up.  Not sure if I am complicating things but at the moment I am getting very confused with it all.

Limited company is to comprise of 3 shareholders/directors.  The 3 shareholders/directors will be investing money to purchase a vehicle and required plant to start trading.

If 2 of the shareholders/directors are putting in a higher amount of money than the 3d shareholder, when it comes to the shareholders agreement, is it wise to have a fair split of the company ie 33 & a third recurring each?

Additionally, what is the best way to get this money invested repaid to the three parties although they are shareholders.  Is it by fair a directors loan?

Any help would be much appreciated.

Thank you 

DullGreyGuy

You have two ways of looking at it....

1) The directors are giving loans to the company, this will be repaid, potentially paying them interest and so wouldn't have a material impact on the shares as its a short term matter, maybe a modest increase for the risk the company can never repay them. 

2) The directors are giving the seed capital to the company that won't be repaid and so are rewarded with a higher proportion of shares which will result ultimately in higher dividends in the long term

Marcon

adronocus said:

Hello

I need some help please with a limited company that we are looking to set up.  Not sure if I am complicating things but at the moment I am getting very confused with it all.

Limited company is to comprise of 3 shareholders/directors.  The 3 shareholders/directors will be investing money to purchase a vehicle and required plant to start trading.

If 2 of the shareholders/directors are putting in a higher amount of money than the 3d shareholder, when it comes to the shareholders agreement, is it wise to have a fair split of the company ie 33 & a third recurring each?

Additionally, what is the best way to get this money invested repaid to the three parties although they are shareholders.  Is it by fair a directors loan?

Any help would be much appreciated.

Thank you 

Depending on the amounts involved, it sounds as if some professional input might be no bad idea. Setting up a company by the DIY route isn't always suitable for complete novices, particularly where funds are being loaned in unequal amounts to a fledgling company. There are a number of methods to consider eg using different share classes, perhaps including preferential shares, doesn't seem to have had a mention.

I appreciate you are trying to keep costs to a minimum, but relying on internet advice has the potential to cost you a lot more if things don't go as planned.

Are you sure a limited company is the right structure? Even from the very minimal info you've given, it's possible that a limited liability partnership might be well worth considering.

Marcon

adronocus said:

Hello

I need some help please with a limited company that we are looking to set up.  Not sure if I am complicating things but at the moment I am getting very confused with it all.

Limited company is to comprise of 3 shareholders/directors.  The 3 shareholders/directors will be investing money to purchase a vehicle and required plant to start trading.

If 2 of the shareholders/directors are putting in a higher amount of money than the 3d shareholder, when it comes to the shareholders agreement, is it wise to have a fair split of the company ie 33 & a third recurring each?

Additionally, what is the best way to get this money invested repaid to the three parties although they are shareholders.  Is it by fair a directors loan?

Any help would be much appreciated.

Thank you 

Depending on the amounts involved, it sounds as if some professional input might be no bad idea. Setting up a company by the DIY route isn't always suitable for complete novices, particularly where funds are being loaned in unequal amounts to a fledgling company. There are a number of methods to consider eg using different share classes, perhaps including preferential shares, doesn't seem to have had a mention.

I appreciate you are trying to keep costs to a minimum, but relying on internet advice has the potential to cost you a lot more if things don't go as planned.

Are you sure a limited company is the right structure? Even from the very minimal info you've given, it's possible that a limited liability partnership might be well worth considering.