Selling a Limited Company
You may desire to sell your limited company for a variety of reasons, including retirement, profit, or simply not wanting to manage it anymore.
When it comes to selling your UK limited business, there is generally no shortage of paperwork! It’s a good idea to take a step back and consider how you want to make the firm ready for sale before moving further.
You can sell your shares to a third-party buyer or to any of your business partners. You can also consider transferring your shares to a relative.
If you have any business partners, you will need to collaborate with them in order to do this. When transferring ownership, you should review your company’s articles of incorporation and any shareholders’ agreement, which will likely include procedures for purchasing and selling shares.
When planning to sell a limited company, you need to consider your shares, assets, liabilities, taxes, professional help and your buyer.
What to consider before getting your business ready for sale?
To plan for your business’s sale, here are some points to take into account. in order to sell, you could either sell the limited company together with its business or get your limited company to sell its assets.
If you have any business partners or there are other shareholders
The choice to sell the firm isn’t just yours. Any shareholders’ agreement must be considered, and the articles of association must be checked for any provisions that must be made. However, before presenting your resignation as a director, you can sell your own shares (thus removing yourself from the corporation).
Check to see whether any of the other stockholders have pre-emption rights (whitch they would need to waive for the sale to go ahead). Pre-emption rights safeguard shareholders by allowing them to block a sale to a buyer with whom they do not wish to do business.
If your the only director and share holder
You don’t need to contact anybody else before selling your firm; you’re the only one who needs to approve the transfer of shares to the new owner. However, as accountants, we highly advise you to seek guidance! It’s also a good idea to double-check any current funding or loan arrangements to see whether they’re preventing a sale.
Selling your assets
Instead of selling a limited company’s shares, you might sell the company’s assets. Your company’s assets, including goodwill, equipment, furniture, fixtures, accounts receivable, inventory, and investments, might be sold immediately to the new owner.
The company’s assets might be sold as a going concern. This is where you sell enough assets to keep the company running in its current form. Customers, suppliers, and workers are then retained by the company.
You’ll want to appraise each and every asset, including goodwill, to determine the worth of your company.
Accounts payable, wages, taxes, and loans are likely to be liabilities in your firm.
In most cases, when a limited company is sold, the firm’s obligations are passed to the new owner as well. Of course, before buying the firm, the buyer will want to look into the liabilities.
Credit Check of your buyers
Don’t forget to run a credit check on your potential purchasers. You don’t just start selling your business to everyone who claims to be able to afford it.
You must verify the buyer’s source of cash and the time it will take to do due diligence on your limited business.
Although the worth of your company is important, you must also consider the buyer’s character and the legal paperwork that must be completed in order to finalise the sale and execute the transaction.
You must also determine how you will make the payment. Will you demand a down payment while the transfer procedure is in progress? Or will the funds be disbursed in phases as the project progresses? You have the authority to make that decision and reach an agreement with the buyer.
Telling Companies house about the sale of your company
It’s critical to notify Companies House and amend the register when you sell your business or make any other important changes.
Companies are required by law to have at least one director, so if you’re the lone director and won’t be continuing on after the sale, you’ll need to nominate a replacement director before resigning. After you’ve arranged the new appointment, you’ll need to fill out an AP01 form and send it to Companies House.
Use form TM01 to notify your resignation as a director, then file a confirmation statement with Companies House to amend shareholder information and shareholdings.
Remember to keep the company’s statutory registrations of members, directors, and ‘those with substantial control’ up to date.
Another option is to make your compnay dormant
If you don’t want to run your business right now, you can put it on hold. This implies it will continue to exist legally, but it will no longer trade. In terms of taxes, you’ll need to inform HMRC that your company is dormant and that it is not generating any revenue from commerce. Even if your company is defunct, you must still file yearly accounts and a confirmation statement with Companies House.