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of directorship question
We have a problem on the horizon and after talking with DP yesterday he agreed that maybe we should ask on here to get some pointers before we broach this with a solicitor/his parents
We have a family farm. For some long ago complicated reason to do with DP's grandfather it was set up as a limited company, so that effectively the 'farm' owns everything including the house that DP's parents live in. Over the years various shares have moved about and different roles have been played (it is VERY difficult to get accurate info out of the parents) but it would seem that the current situation is that DP's parents are directors, his mother is the secretary, and DP is a director. There is a sister in scotland who has ME who has some 'sleeping partner' type shares.
The farm itself hasnt made any profit worth mentioning since DPs parents did this sort of half retiring/half not retiring (who knows) thing a fair few years back. There is a holiday cottage which just about covers the mortgage on itself and is a constant source of worry to DPs mum. There is a whole mess of problems associated with water supply and road maintanance to other properties on the farm land which I think I am getting to grips with. There is no actual 'farming' done by DPs parents - any arable or anmals belong to others who rent land.
about 3 years ago DP and I started to take over some responsibilities of the farm. We enrolled in some subsidised conservation projects and after a lengthy planning process we opened a glampy campsite which is set to bring in a fair amount. This has provided a reasonable source of income and provided a potential for more stuff.
DP's dad had a hobby that he was involved with on the farm but a seperate enterprise, which also provided an income over the winter. His partner in this has just pulled out which has left him adrift as he is too old to do it by himself and he has an unfortunate attitude which has probably alienated people who may have helped him.
DPs parents are not business minded. Not at all. They tend to live for this afternoon and they have sadly let every asset with potential go at the cheapest price ever. This is galling but there is nothing we can do about the past but it does highlight concerns for the future.
DP works full time in seperate employment but also works nearly full time on the farm as well, investing time and money with taking the farm forward in a profitable way for the future. I work more than full time in the summer, and pt in the winter. So far we have not taken an income due to reinvestment into the business but our business plan is running better than we predicted for our enterprises on the farm.
So thats the background. We have a few worries or things we might like to try to do but dont reall know how. DPs parents live in the farmhouse but its owned by the farm. They have very low pensions but they dont seem to be able to qualify for any pension credits because they are directors/have shares in the farm. MIL has a degenerative disease which is progressing. She could get financial help but for the directorship which doesnt pay them any money. Is there any way of them 'retiring' their directorships so that they effectively pass the company onto the next generation. This would free them up to apply for the low income benefits that they would qualify for, and possibly reduce their stress as they could stop being concerned about running the farm ineffectively.
also we are aware that MIL is getting worse in her condition and we dont know what might happen if she needs medical help or eventually to go into a nursing home (I would imagine she will try to access stuff at home as long as possible) - will this have an impact on the business if the company owns the house/farm/etc or is it likely that the business will have to be sold to pay for her/FIL care as they get older?
also they have set up some kind of trust for the farm to go into as part of their wills. this has something to do with inheritance tax and something to do to protect SIL as she lives on incapacity benefit due to her ME/Bipolar. Can the whole farm be transferred into the trust prior to their deaths? would that be a move that could be done.
DP is very worried. he is concerned that he is working like a dog for nothing, or that his parents wont/cant do anything to protect the business. If a proposal would make life easier give them more living day to day money and allow them to stay in the house then I think they would jump but as we dont even really know what why and where we dont know what information to ask for what suggestions to make. any advice would be gratefully recieved so that at least we know what direction we need to be taking conversations.
First of all can I say you and DH are right to have concerns and will be doing the right thing in getting advice.You need specialist legal advice and if you give some idea of where in the country you are we can probably recommend someone
The missing info that would help at this stage is who owns the shares.If you don't know or are in any doubt you should check this with the Registrar of Companies
Coming from a farming family myself that has had similar, but potentially more complicated issues -tenant farmers, a limited company and a partnerships. I know you need specialist help from people who know farming.
My parents used Michael Alexander at Alexander's in Huntingdon to help them. He was worth every penny they spent and they emerged from their situation considerably financially better off than they would have without him.
I agree with Lonecatwithkitten, a good agricultural land practice is what you need rather than an accountant (I am an accountant) or lawyer.
Who the directors are is not really important, you need to know who owns what shares and what rights attach to them. Get the last Annual Return (AR01) and a copy of the Articles of Association from Companies House - it will cost you £2. Get the last Annual Accounts too.
Assuming the parents own the majority of the shares you can't do anything without them on board, and it is pointless commenting on any individual possiblity like the parents transferring the shares to a trust without looking at the whole picture.
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