Freehold Company Limited by Shares - can shares be uneven?

Bookworm105

Grumpy_chap said:

Bookworm105 said:

as the bit you quote (taken from HMRC link above) says 

• get any income from land
  

of course there are RTM companies that do not charge service charges ("get income from land") or pay insurance so are dormant, but that is because they have contracted those aspects out to a separate legal entity to do (or the leaseholders are happy to live in a building without ongoing maintenance or insurance) 

It is almost certain that the freehold company will "get income from land".  The shareholders might take the decision to waive annual fees but, sooner or later, a lease extension will be required somewhere and that will generate an "income from land".  The freehold company will also need to operate whenever the first flat is sold to agree the transfer of the lease.

yes, hence my scepticism that the company can be dormant as easily as OP seems to think . It is certain it will have dormant and non dormant periods and a further reason why OP needs to seek professional support

Grumpy_chap

Bookworm105 said:

yes, hence my scepticism that the company can be dormant as easily as OP seems to think . It is certain it will have dormant and non dormant periods and a further reason why OP needs to seek professional support

Most absolutely.

The OP seems so fixated on operating a dormant company that this is becoming the tail that is wagging the dog.  The Freehold company seem to be sacrificing potentially large income amounts in pursuit of that objective:

carl_h said:

We can waive ground rent.

Service Charge payments are specified in the leases. I am new to this but a Management Company has been appointed that will collect charges & carry out maintenance.

Regarding lease extension payments it should, I think, be possible for non-participants to get lease extensions at no more than the cost of legal fees, ie. the freehold company would not profit from this.

For reasons I cannot discuss our lawyer did not finish the job, no fault of his own.

I note, also, this one reference in the thread to professional advice having been sought.  I wonder whether the Lawyer not finishing the job was in any way linked to the Client refusing to heed sound advice given.


Even the way the Freehold shares were worked out is very odd:

carl_h said:

We are setting up a "Freehold Company Limited By Shares" as opposed to "By Guarantee". Many articles online refer to participants receiving 1 share each, however, ours have paid different amounts towards the purchase price of the freehold for the entire development. They wish to receive numbers of shares that reflect the total amount (minus other fees) that each participant paid.

This total amount was itself calculated according to 2 items, one variable & one fixed. The variable item was the floor area of their flat, the fixed item was an equal share of the costs of those residents (not many) who chose not to participate.  Is it possible to allocate shares in proportion to the total sum paid (minus other fees) by each participant? Or is it only possible to get 1 share each? Thanks in advance for any assistance.

The variable costs linked to floor area means that a leaseholder with a long lease remaining and a larger flat will have paid more than a leaseholder with a small flat and a short lease - yet the leaseholder with the short lease has seemingly gained more through the marriage value.

Again, I wonder whether the leases have been extended as part of the creation of the Freeholder company.  Does the OP, or any of the shareholders realise that the leases still exist in their prior form unless specifically extended?  There remains a Freeholder plus a series of Leaseholders.

Any Leaseholder would be well advised to extend the lease to "indefinite" period while the Freeholder Company is of the mind not to charge for such extensions...
An absolute bargain, especially for those that chose not to participate in the Freeholder Company.

Bookworm105

Grumpy_chap said:

tail wagging the dog

Even the way the Freehold shares were worked out is very odd:

indeed, particularly given OP states 5 shareholders each having 25 x £1 nominal value shares with total capital issued 125 shares and the whole initial thrust of the thread being how to "convert" those into unequal holdings reflecting the unequal sums paid - although the only payment apparently received relates to the respective freeholds

far from clear whether the company has actually received clearly separate payments for each share purchase as you cannot make a share "paid up" by allocating money received for another purpose to the share cost given the freehold was a formulaic cost that itself needs to be paid in full