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Scottish share-out

03 May 2011
Issue: 4302 / Categories: Forum & Feedback , Capital Gains
A partnership owns shares in a trading company, but only two of the ten partners are directors. Will entrepreneurs’ relief be lost?

We act for a (Scottish) professional partnership which comprises ten partners. The partnership owns all the shares of a trading company.

The trading company has two employed ‘executive’ directors and two of the partnership’s partners act as ‘non-executive’ directors sitting on the board to safeguard the partnership’s interest in the company.

Although there is no immediate prospect of the company being sold it strikes us that this structure is not particularly efficient for entrepreneurs’ relief purposes because there are only two partners who have been formally appointed as directors; the remaining eight are neither directors nor employees.

Our thoughts on improving the structure are as follows.

First transfer an equal number of shares out of the name of the partnership and into each individual partner’s name.

Each partner would then own 10%...

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