Limited company formation

requestgo

Is it possible to pay for shares of new company with bonds/some other securities/land?

dbran

Hi

You can pay for shares with whatever consideration you wish.

Kind Regards

Dbran

requestgo

Thank you for reply.

We are going to set up a limited company with a friend and he will be paying for shares using cash, but I would like to pay using shares of another company. Is there any tax involved in situation like this?

dbran wrote: »

Hi

You can pay for shares with whatever consideration you wish.

Kind Regards

Dbran

nompere

requestgo wrote: »

Thank you for reply.

We are going to set up a limited company with a friend and he will be paying for shares using cash, but I would like to pay using shares of another company. Is there any tax involved in situation like this?

You should discuss it with your accountant. Such a transaction might well give rise to a CGT liability on your disposal of the shares to the new company. It's also possible that share for share swaps may be relieved from CGT. Stamp Duty should also be considered.

requestgo

Well, I believe it is better to have some general understanding before talking with professional so I know what kind of questions should be asked and so on.

You are right there might be some form of taxation involved. This is what my question is about.

nompere wrote: »

You should discuss it with your accountant. Such a transaction might well give rise to a CGT liability on your disposal of the shares to the new company. It's also possible that share for share swaps may be relieved from CGT. Stamp Duty should also be considered.

dbran

Hi

You may also inadvertantly create a group situation which also has tax and company law implications.

dbran

requestgo

OK. Let us not focus on this. If I use bonds to pay for shares of new company is there going to be CGT liability in case these bonds appreciated in value?

dbran wrote: »

Hi

You may also inadvertantly create a group situation which also has tax and company law implications.

dbran

nompere

If there would be a CGT liability on an ordinary sale, then there is likely to be a similar liability on a transfer.

dbran

This is a forum about accountancy.

Specific tax advice is not allowed on this forum per the charter and you should post in the taxation forum or seek professional advise from you accountant and tax advisor.

Regards

dbran