As all accountants know, when a director/shareholder in a small private company wants to leave, it is sometimes difficult to find a buyer for his/her shares. Often, the other shareholders do not have the money to purchase the shares so the seller might turn to the Company.
Working with Accountants
I work closely with accountants where their clients wish to purchase shares back from one or more of its shareholders. My accounting colleagues advise on the tax position and will often prepare the application to the HMRC for advance clearance so that the buyback will qualify for capital gains tax treatment. I will then advise on the company law procedures and draft the appropriate documents, including:
• A contract for the share buyback between the Shareholder and the Company; • Board minutes approving the buyback; • A resolution of the shareholders; • The relevant forms for filing at Companies House; and • A stock transfer form transferring the shares (although there are differing opinions as to whether this is necessary).
So, if you have a client who wants to effect a share buyback, feel free to contact Richard Jenkins on 024 7698 0613 or Richard@clariclegal.co.uk for further advice or assistance.