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New queries, issue 4672

13 November 2018
Issue: 4672 / Categories: Forum & Feedback

Exit plan; A wise move?; Share sale; Outstanding payments

Exit plan

Transferring sole shareholder’s company shares to son.

A small limited company (OldCo) has traded for many years and has a modest amount of money in the bank. The sole shareholder and director is planning a gradual exit over the next five to ten years.

He has now appointed his son as a director of the company. The son would like to buy 20% of the shares from his father at a fair value but cannot finance the purchase.

His plan is that:

  • the son will form his own limited company (NewCo) to buy the shares;
  • the OldCo shares will be sold by his father to NewCo at a fair value without any restrictions;
  • NewCo will borrow some money from OldCo and this will be used to partly pay his father for the shares;
  • ...

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