Returning an Investment???

Sarah_Freya

Hello,

Hope all is well and you’re enjoying the sunshine. I'm new to this forum mainly due to AAT not being able to help me and suggested I asked my query on here, so here goes......

I’ve received a request from a client and I have never heard of it before so was wondering if anyone has come across or done this sort of thing before and if so would be able to help/advise on the question?

The original question was "If the company wanted to return £450,000 back to shareholders, what would be the best way to do this and how would we go about it? The idea is that these funds would be returned soon before we fully liquidate the company."

Basically, there are 4 shareholders, they each paid 1p per share which totals £1,000,100.00 and is in the accounts as share capital. The assets in the company have been sold and the company has a healthy bank balance.

I went back to the client asking if the shareholders will be returning their shares back to the company and then cancelling the shares and his reply was "I'm not sure - is that the best way to handle this or is there another method."

Any help will be gratefully received 😊

Thanks,
Sarah

Neillaw

If they are going to liquidate the company then it may be worth a conversation with the liquidator as to the best option, the company may be solvent in which case your going to be looking at capital gains on the sale of the shares.
This is something I would class above my pay scale as it may involve solicitors etc - it may be worth speaking to a larger audit firm for advice.