Options please.

[chillipepper]

I'm a 50/50 owner of a limited company where my partener and myself are the only workers.I'm soon to enter full time education and will want to leave the business behind. What I am asking is what are my options/obligations when coming out of the business?If I have not explained enough please feel free to ask questions and I will reply. I am most grateful for any help or advice.

[tamborine]

You're 50% responsible for all debts and assets at the time you default.

What's the business?

[chillipepper]

It's a double glazing installation business. We have no debts, all accounts are paid monthly. We don't have many assets either just a van and tools. We have traded profitably for 3.5 years. What are my options with my share?

[Skyline D]

Actually, as it's a limited company, unless he's actually given personal guarantees he wouldn't be responsible for debts and assets though, as a shareholder, if the company was wound up he'd get half of any surplus. And if it was to become insolvent then there are possible actions for wrongful trading and director disqualification of course.

Anyway, leaving that aside, if it's a limited company and you own 50% of the shares then options are:

1 - Sell the shares to your partner, or an acceptable third party for an agreed price.
2 - Retain them but leave him to run the business and, presumably, keep all the profits whilst you aren't involved.
3 - It's theoretically possible, if there are funds in the company itself, for the company to buy back your shares, reducing the issued capital and meaning your partner would become 100% owner without personally having to fund it.
4 - Wind the company up and split everything 50/50 leaving him to start again for himself though if he intends to remain in the trade I can't see that being an attractive option. It's pointless.

Fundamentally, you either sell your shares or you keep them. Those are the only two options. If selling then price becomes the matter for debate. Best if you agree one. There are formulas to work out a price but nothing is set in stone and only the two of you really know what a fair price might be.

[chas2008]

you dont actually own a limited company, you own shares in that company. The other worker is a director not partner, totaly different thing.
I assume you own 50% of the shares ?
The difficulty is putting a value on the shares and then deciding who to offer them to, you cant offer them to the other shareholder as one director cant own 100% of the shares of one company .
Unless there are personel gurantees in place you are not liable for any of the debts equally so you dont own any of the assets.

' Shareholders in limited liability companies are not responsible for company debts, although if required, directors may be required to guarantee loans or credit granted to the company.'

http://www.bytestart.co.uk/content/19/19_1/for ming-a-limited-liabili.shtml

[Skyline D]

"you cant offer them to the other shareholder as one director cant own 100% of the shares of one company "

Sorry but that's absolute rubbish. I work with some multi-million pound turnover companies where one director / shareholder owns 100% of the share capital. There's absolutely nothing in law that prevents that and there never has been.

There used to be a rule that a sole director couldn't also be the company secretary but he could certainly own all the shares and even that rule has now been revoked as private companies do not require a secretary.

Ignore Chas, chillipepper. You CAN sell your shares to your fellow director / shareholder if he wants to buy them.

And also, if there is a surplus of funds on wind up of a company then yes, the shareholders DO share in the asset value.

[chillipepper]

Absolutely brilliant advise, thank you all.

[chillipepper]

Sorry! Brilliant ADVICE.