New queries, issue 4224

Minority report

A trading limited company currently has an agreement stating that the value of any minority shareholding for the purpose of any share transfers will be its ‘fair value’.

This would produce a value of approximately £20 per share based on dividend yield. There are a number of shareholders including some who are connected to each other and some who are also directors.

One director/shareholder works full time in the business.

The directors are looking to adopt new articles of association and a shareholders’ agreement stating that the value of any minority shareholding will be based on the value of the company as a whole and the relevant percentage shareholding applied thereto. This would probably produce a value of £200 per share.

Numerous questions come to mind including the following.

1. What if anything are the PAYE implications? Is a report required on a form 42...