The problem with selling shares – Luke Moore

News

  Posted by: manpreet.boora      2nd October 2017

Here, Luke Moore, Co-Founder of Dental Elite, offers his insight into problems that can occur when selling shares of a limited company.

There’s a lot to consider when selling shares of a limited company, but with forward planning and the right support, you’ll be able to navigate your way through a share sale confidently and comfortably. Here’s what you need to know…

Under GDC rules it is a legal requirement for the majority of the directors to be registered. The GDC have agreed it is passable for only one director to be GDC registered where there are only two directors (e.g. spouses) but at all other times the majority of the directors must meet these requirements. Failure to comply, however, would be a breach of the regulation, resulting in potentially severe consequences.

Where it can get really complicated is when an NHS contract is considered an asset of the limited company (e.g. in the company name). In these instances it is imperative to keep your company ‘clean’ – e.g. staying clear of remuneration trust investments, or racking up debt against the company name – because when you come to sell your only real option is to sell the limited company and the goodwill will be impaired if the business is tarnished in some way. It can also pay to keep non-dental business related assets separate from the limited company.

The other eventuality to consider is how you should structure limited companies when multiple dental practices are involved. In my experience, it is much more efficient to have each and every practice set up as a separate limited company, as it affords greater flexibility when the time comes to sell. Conversely, by grouping all of your properties under the umbrella of one limited company, if you were ever to try and sell one of the practices you would be subject to a statutory demerger. Sounds simple enough, but if you have an NHS contract you would likely need to negotiate the terms of your contract, which could have a negative impact on the sale. Thus, unless you want to find yourself in deep waters later down the line, it is always worth considering setting each practice up as its own limited company.

The last thing you should know about selling shares of an incorporated company is that when it’s done right, it can be extremely advantageous to you as a vendor. Not only because it allows you to retain cash and profits in the limited company in the years leading up to the sale, but because it would leave you eligible for Entrepreneurs’ Relief. This means you would only be required to pay a lower rate of 10 per cent tax on not only the indicative price on the disposal of your shares, but also all of the cash and historical profits you haven’t withdrawn from the company.

So there you have it – share sales in a nutshell. If you have any questions or need personalised advice, call Dental Elite today.

 

For more information contact Dental Elite Visit www.dentalelite.co.uk, email info@dentalelite.co.uk or call 01788 545 900

 

 

 


No Comments


No comments yet.


Sorry, the comment form is closed at this time.