Passing a Limited Company onto next generation

pippip

Hi,

Wondering if anyone can provide advice on how we should proceed to transfer a company to next generation.

Summary -

• Small family run limited company since 60s.
• Mothers siblings (6) as, £ shareholders? (one deceased, other with dementia, no direct involvement in company, probably don't even know the shares exist)
• My mother and uncle are the directors. (no issue here with sign over from either)
• Accountant who set it up long gone and no proper paperwork to confirm exact shares setup. (Current accountant does bare minimum for returns, will be retiring soon)
• Breakeven company, some machinery purchased through mothers pension, no outstanding debts.
• Leased premises
• No employees apart from me

We are now working on how to transfer the company to me.

Option 1 - The accountant is recommending I setup my own limited company with a new accountant. I'd then have to setup with bank, suppliers, company formation etc. We'd then work on transferring equipment & stock, lease over. He makes it sound like I'd just setup and from there all new orders would be through the new company. They'd then work in the background to close the old company. Is there an advantage in this method with regards to startup grants? Will I need to organise startup capital for this to work?

Option 2 - The alternative being we work out how to get rid of the shareholders ...... legal, share costs etc. What's involved in that and how to work out cost involved? Then just change the directors. Most of family wouldn't have a problem to relinquish the shares but you never know. Is there a way to calculate a payoff so they don't have a choice?

I'm sure I'm missing a lot of other information but if anyone can provide opinion/advice.

Mick Tator

That is a situation far too complex to answer here. There are all sorts of issues at stake – taxation, liability, family, etc. The most basic question is do you do a share sale or an asset sale? Or liquidate the old company and start afresh?

The big clue is in the advice from your accountant -who you say is about to retire – “The accountant is recommending I setup my own limited company with a new accountant.”

You need a new accountant, now. S/He will advise and also should obtain the books and records from the former. With the details you have written you are walking into a gunfight with a stick by using the old accountant, who at least has the decency to tell you to find a replacement.

pippip

Thank you for the comment, I appreciate the complexity of what I've to overcome. I suppose I have so many queries on either path I was just looking for any small tidbit that might help.

The old company is in such a state with long outstanding invoices and a very messy papertrail I have a feeling it will just take so long to sort that I might well end up retiring before it's sorted.

I'll explore your share sale / asset sale /liquidation. That looks like a great summary right there of the situation.