New queries, issue 4362

Financial fallout

I have a limited company client owned equally by two shareholders who have now fallen out with each other. They were good friends – but not any longer!

The activity of the company is consultancy based and their plan is to form two new limited companies that they will each own on an individual basis and they will then trade independently.

When the old company ceases to trade there will be net assets of about £100 000 in the pot and each shareholder will be entitled to 50% of this amount.

My thinking is that the best option will be for each of the new companies to make a £50 000 management charge to the old company giving opening capital to the new companies and I can then plan the extraction of the money from the new companies with future dividends and salaries.

I...