becoming a limited company

[info]

I'm only jsut at the enquiry stage of IVA - have spoken to sompany who think IVA will be an option for me.
My question is.... i'm self employed with my own company. I've been told by one of my suppliers that i need to beomce a ltd company and register with companies house (long story i will not borer you, but i HAVE to register as LTD NOW)
So - to register i need to be either director or secretary - BUT If the IVA goes wrong and then i have to delare bancruptcy bieng a director will not be allowed. shall i rgister a family member as the director (yes i trust family member - my son)with me as the secretary jsut incase? Also, re the shares purchase for registration for LTD status, should i purchase one share or let the other person purchase.

[MelanieGiles]

Hi enquiry

In the event of your subsequent bankruptcy, your company will be left directorless if your son is only acting as Company Secretary, so I would have him as a director from the outset.

If you intend to be a shareholder of the company, you will need to purchase a percentage holding. These shares will then become a personal asset of yours, which might need to be realised in a subsequent IVA or bankruptcy.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[info]

Sorry - i'm still confused. So... INCASE i have to go down the bankcruptcy route, I SHOULD have my son as director and myself as secretary. then just have my son purchase a single share?

Also, will i be able to be lsited as a director at a later date (after the IVA ends or Bancruptcy is discharged?)

[MelanieGiles]

Your son can be a director but not a shareholder if you like - or you can both be shareholders. Once you get your discharge from bankruptcy, you can then be reinstated as a director.

If you are thinking about incorporating your business, I strongly recommend taking specific advice from an accountant or commercial lawyer.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[info]

Thanks for helping melanie but i'm sooo confused.

you say 'Your son can be a director but not a shareholder if you like ' but then say both him and i can be shareholders?? I'm really confused now!!!
Perhaps i need to be clearer. I have been self-employed for about 12 years. It's typical that jsut before an IVA one of my suppliers says i need to be LTD company to still receive work from them (it's nothing to do with my IVA)
I'm thinking ahead, that if my IVA is rejected and i have to declare bancruptcy, then i would not be allowed to be a director - hence my thinking ahead that it might be best if I list my son as the director when registering the company with companies house.
So, in summary. if i lsit my son as the director and myself as the secretary and my son purchases one share. (none for me) then my business will not be affected at all in the IVA or in a bancruptcy?


Also, what do you mean by 'incorporating your business' and regarding seeing an accountant or commercial lawyer - i have no funds to do that - hence my iva. My business has no funds either!

Oh - and i'm jsut thinking of registering 100 shares at one pound each.

[MelanieGiles]

Hi

This post could go on for ever, and at the end of the day you are asking for corporate advice.

If you put the business into your son's name, then he will have to pay you for the business assets and its goodwill. You cannot just walk away from this and hide it within your IVA.

You really need to take advice on this important issue, as it is clear that you do not understand what incorporation of a legal entity actually means. Sorry if this is unhelpful, but you do need specific advice.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[go_4_broke]

OP - It needn't be too painful.

'Incorporating' just means converting from a sole trader to a company.

If you buy an off-the-shelf company just make yourself secretary and your son sole director. Give your son all 100 shares ( I think this is ok, there used to be a requirement to have more than one shareholder but I think it's gone now).

This means your son now owns the company. Your son doesn't have to pay you, but if your business has substantial assets, eg, tools, equipment, premises, and you give these to the Company you could be in trouble for hiding these from your creditors in an IVA or Bankruptcy. However if your son already owns all the stuff. . .

Don't forget as Secretary you have statutory obligations such as filing accounts. Get all the details from www.companieshouse.gov.uk, otherwise it's nothing a local small business accountant shouldn't be able to sort out for you.