So, you’ve set up your Limited Company and you’re ready to start allocating shares in it. Now, you’ve got some important decisions to make. For a start, you’re going to need to decide how many shares you want to issue, and who gets them.
When someone buys shares in your company, they’re not just giving you free money. You might be the Director of your company, but it’s the Shareholders who’ll end up owning it. Keep in mind that you can be both.
The number of shares a Shareholder buys determines their liability if the company ever falls apart, but it also measures their entitlement to dividends and the weight of their votes in certain types of meeting. Depending on what type of shares you’re selling, Shareholders may have full voting rights or none at all. There’s no universally accepted “normal” way of structuring your shares, so give us a call to talk about your options before you dive in. In the meantime, here’s a quick list of pointers to get you started:
It can be quite an involved procedure slicing up your business pie. Get in touch and we’ll make sure you never bite off more than you can chew.
If you’re looking to attract high-flying or particularly skilled workers, you might want to think about offering shares as part of their employment terms. These “Employee Shareholders” have a real stake in the business, which can be important if you’re trying to build something lasting with them.
If the company does well, those shares increase in value, and there may be some tax benefits if the employee later wants to sell them. The value of the shares you offer has to be at least £2000, but there really is no upper limit.
Not every employee is a budding investment tycoon, of course, so you’ll have to be prepared to take on the cost (within reason) of the advice they get before accepting your offer. There are also some rules that both the company and the employee must keep in mind. For example:
There are more considerations, of course, so make sure you get some professional advice before taking this particular plunge.