Process for issuing new shares and alloting to another shareholder

[dowjones123]

Current I have a company, where I am the sole owner of Company X

Capital Structure:
Class of shares = Ordinary
Num of shares = 100
Amount Paid up for each share = 0
Amount unpaid for each share = GBP 0.01

Aggregate nominal value = GBP 1

Ownership:
Person A (me) owns 100 (all) ordinary shares

I have incorporated via Companies House, Articles of Association are the model articles, there is no shareholder's agreement as of now (since there is just one shareholder)

Changes intended:
I want to have another co-founder (B), who brings a lot of experience and I want him to have 66% share, and 37% to me. This needs to be done now.

In 3 months time , I want to have an SEIS investor (C) who wants to come in with some amount like GBP 10,000 for 0.5% of the company

My questions:

1) Is it possible to have total 10,000 shares for A and B (A = 6600, B = 3700) with nominal value (paid + unpaid) of GBP 0.0001 instead of GBP 0.01 as currently? What do I need to do for doing that - is that a stock split, or should I simply declare that in the SH01 form (I see on the companieshouse form that there is a way to ammend share capital)

2) Are the following steps correct:
a) Person B gives a letter stating him wanting to be alloted 6700 shares
b) Since there are 100 shares now, and total shares at end would be 10000, I issue 9900 shares and allot 3200 to A (me) and allot 6700 to B
c) I file a SH01 accordingly, where I ammend capital to have 10,000 shares of 0.0001 nominal each (zero paid, 0.0001 unpaid for each). I document share certificates for both A and B accordingly
d) We document a shareholder's agreement between A and B
e) File annual return with this shareholding structure
e) later when C comes in, we want to issue him 50 shares (of nominal 0.0001) for a price of GBP, but want these shares to be non-voting shares. So are these the same type of shares that the 10000 shares of 0.0001 nominal are? Or do I have to create a separate class of shares which are non-voting, issue 50 of those and allot them to investor C for GBP 10000 and issue share certificates accordingly, and SH01 accordingly

Where do we document this fact that these shares are non-voting shares? Would this be in the new shareholding agreement between A, B and C, or is it just in the share certificate to C?

Thanks a lot for all the help

[Clare@InTouch]

I'd recommend you get proper paid for legal and tax advice before doing anything, as what you do now can have big repercussions further down the line.

What is the relationship between the proposed parties? Just associates, or spouses, or partners?

[dowjones123]

A and B are partners in business. C is an external investor

I'd recommend you get proper paid for legal and tax advice before doing anything, as what you do now can have big repercussions further down the line.

What is the relationship between the proposed parties? Just associates, or spouses, or partners?

[Clare@InTouch]

A and B are partners in business. C is an external investor

In that case I'd definitely get a shareholders agreement in place, and some legal advice on amending the Articles to include things like pre-emption rights (so shareholder C cannot go and sell their shares to your competitors). The Articles will need to be amended if you're having different classes of shares anyway, so do it all at the same time.

The paperwork at Companies House is the easy bit, but the rest is worth spending time and money on now to avoid a whole load of grief if you fall out in 5 years time.

[northernladuk]

A and B are partners in business. C is an external investor

But not related in anyway to yourself? Partner, g/f, b/f, wife, family?

[dowjones123]

But not related in anyway to yourself? Partner, g/f, b/f, wife, family?

That is correct. A and B are friends. C is a distant friend of A and B

[dowjones123]

What is the process of making shares 0.01 nominal shares into 0.0001 shares

Why I want to do this? B, when he comes in, wants to pay just a token amount. If I issue 6600 shares of 0.01 to him, he needs to pay GBP 66, right? Or can paid amount be zero, and unpaid amount be 66 for B

Also, when I create 3600 shares of same class (ordinary, 0.01 nominal each) for me (A), what is the process by which I allot it to myself?

[ContrataxLtd]

Current I have a company, where I am the sole owner of Company X

In 3 months time , I want to have an SEIS investor (C) who wants to come in with some amount like GBP 10,000 for 0.5% of the company

My Advice would be to spend a few hundred quid and take some professional advice on this now rather than down the line, especially given the fact that you want to look at SEIS investment in the near future. Ideally do this with a firm that have had experience dealing with SEIS before because a few little errors can cock the whole thing up!

I also hope the company currently has no value to it or you could possibly have some capital gains to pay on these transactions, or even income tax on the person joining the company. Again, paid professional advice is a must here.

Martin
Contratax Ltd