Business Protection AuditBack
- Mr A Director Aged 36 – 50% Shareholder; Mr B Director Aged 40 – 25% Shareholder; Mr C Director Aged 42 – 25% Shareholder
- IT Company established 6 years
- £4m turnover - £550k Profit Before Tax
Client Concerns & Issues
- The clients required clarification on how their families would obtain value for their shareholdings in the event of their demise
- They wished to consider the financial impact of any one of them being unable to perform their duties -
How would they replace the lost revenue?
- As a Company that is growing & making money – they never seem to have any money
- They required clarity on their current arrangements & how effective they would be in meeting their objectives
What we did
- Reviewed the existing Shareholders Agreement – considering not only what each Director contributed by way of time, money etc but also considering what happens if things go wrong
- Agreed a Business valuation – in consultation with their other professional advisers
- Established an annual review at which the valuation would be updated & agreed
- Method of Directors remuneration reviewed – producing combined Directors Income Tax saving of over £45,000 per annum
- Holborn's Ownership & Profit Protection Strategy – formal & tax efficient agreements to enable full value to be realised for shareholdings & business profits to be protected.
- Arranged for the Drafting of a Company Will & re-drafting of Personal Wills
- 2% of turnover diverted to protecting shareholders interests & securing the ownership & profits of the Company
- In the event of a future dispute a robust shareholders agreement will minimize possible ambiguities or mis-understandings
- The Ownership & Profits of the business are protected in the event of the death or disability of the shareholder/directors
- From existing cashflow & without detriment to the Company or individuals funds are being accumulated at the rate of £80,000 pa for benefit of the Directors
- Annual Tax savings of over £20,000 per annum
- A regular system of review meetings ensures their stated aims and objectives are achieved
This document is provided as a working example and for information purposes only, this should not be construed as financial or investment advice.