Tax liabaility of issueing New Class of shares


G

Gary Hill

We have a small closed company with two shareholders. We have
appointed two new directors and wish to share the profits equally with
them through dividends.

We have sought advice from our accountant who has come up with various
options regarding gifting original shares or issuing new shares. Both
of these incur large costs for the new directors as they will need to
purchase the shares based on Inland Revenue valuation or pay income
tax on the value of the gift.

Our question, which our accountant has failed to answer is, can we
issue Class B shares to the new directors that only have dividend
rights and if so would these be subject to the same Inland Revenue
valuation as the Class A shares?

Any advice on this issue would be much appreciated.
 
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M

Mike Lewis

Our question, which our accountant has failed to answer is, can we
issue Class B shares to the new directors that only have dividend
rights and if so would these be subject to the same Inland Revenue
valuation as the Class A shares?
Yes, they are still receiving a valuable asset, just not quite as valuable
if no voting rights. There is also a whole new bunch of legislation in the
Finance Act 2003.
 

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