Peter Rayney looks at key considerations when structuring shareholdings in a family company.
Companies are often set up in a hurry, with no real thought being given to the commercial and tax efficiency of their shareholding structures.
For various personal reasons, some family company ‘owners’ prefer to hold all the shares. As far as they are concerned, this gives them ‘total control’. In practice, overall control can be enjoyed by holding at least 75% of the voting rights since this would enable the ‘owner’ to pass special resolutions, vary its constitution and put it into liquidation. For effective day-to-day control, such as the appointment and removal of directors, determination of remuneration and dividend policy, it is only necessary to hold more than 50% of the shares.