Redding333 started this topic @ 11:56 on 18/08/2004
Hi. Forgive me for sounding naive, but can someone explain to me how shares work when setting up a new limited company? EG: if shares are set at £100 to be divided between two directors, do those directors have to actually pay someone £100 to validate those shares? If so, what is the procedure for this? And how do you establish the share amount you want to set in the first place? Etc. Many thanks in advance, Redding.
RE: shares in ltd companies
James Smith | 18/08/2004 12:22 PM
You would simply place £50 each in the company bank account to "buy" the shares. There is no third party to which you have to pay this.
In terms of setting the number of shares, this will depend on your circumstances. I normally set up a two person business split 50:50 with 2 £1 shares issued as this makes bring investors in later it is a little easier a you dont end up with large numbers of shares issued.
If you are setting up and running a limited company there are quite a few posts on this topic if you do a search on the forum. I know its going to sound terribly biased but you do really need to take some proper advice in the running of the limited company as it is very easy to make a mess of it by trying to DIY. If required I am happy to take a call on this type of topic as a free consultation to help people out at the start when it can be really quite confusing.
Regards,
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James Smith
Chartered Accountant
www.jamesesmith.co.uk
01235 536 773
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Your indispensable guide to Small Business Bookkeeping, Self-Assessment & VAT
RE: shares in ltd companies
Ian J | 18/08/2004 12:25 PM
If you buy a limited company off the shelf it normally comes with a nominal capital of £100 of which a minimum of two shares of £1 each have been issued to the person who registered it. These shares will be transferred to yourself and one other that you nominate when you buy the company from them.
There isn't a great deal of point in increasing the £2 issued capital to the whole £100 unless you intend to have loads of shareholders.
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Ian
Factoring ,
Invoice Discounting ,
Trade Finance and
Asset Finance specialist broker.
Founder member of
Independent Factoring Brokers Association
RE: RE: shares in ltd companies
Steve-SFSgo | 19/08/2004 02:12 PM
Hi Redding
Virtually all limited companies are formed with just one £1 share issued to each owner of the new company, assuming all owners are equal. You then simply place this amount in the company's business bank account once opened (e.g. 2 equal owners hold in total £2 worth of shares so this amount goes in the business bank account). Theses shares are called "issued shares".
For future development and investment the company will then usually have further shares at its disposal for future use. This is called the “authorised share capital” and is usually £1000 worth of shares divided into 1000x£1 shares. So if you issue only 2x£1 at the start the company has a further 998x£1 shares available to issue in the future if you want to bring in new owners/investors. Until the remaining 998 shares are issued they remain worthless and can remain so indefinitely.
Please feel free to contact me for further clarification if needed.
Regards
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Steve - Small Firms Services Ltd
href="http://www.sfsgo.com/" target=_blank>Company Formation - Company Registration -
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RE: shares in ltd companies
Redding333 | 20/08/2004 05:18 PM
I would like to thank each and everyone for their extremely helpful replies in response to my query about shares in limited companies. And thank you also for offering your follow-up advice. I will be in contact with you in due course. Best regards, Redding.
