URGENT -What does being a shareholder of a limited company mean for me?

[Namechangerneedinghelp]

My H is setting up a private limited company.

I am SAHM with no income.

He wanted me to be a director but I said no as I was worried about being liable for any potential future losses.

So today he has told me his accountant has said I should be a shareholder.

He has not dicussed it with me at all. I dont know what any of this means. I dont know anything about being self employed.

He wants me to send my NI number and fill out a form his accountant has sent him right now today.

Is this a wise move and what will this mean for me? Will I be liable for any losses?

[LotusLight]

Normally non working wives are very very keen to be a director and shareholder as it means he c annot shaft you so easily on divorce! Unless you think he's engaged in a criminal business I would jump at the chance.

Once you are a shareholder if you want to give up that right (and remember if the company does well the shares could be worth £100m so do not assume they will be worth nothing, have a bit of confidence in your husband unless he's an utter loser I suppose) you as said above can transfer them to someone else who might want them or your husband. You cannot however force anyont to buy.

if he's so keen you are a shareholder what about suggesting yo hvae 80% of the shares? That might take the wind out of his sails. Plus you are a director and also get a casting vote on any issues if you and he disagree.

[LotusLight]

He is doing all this to pay less tax. If you are a communist or socialist you may be very unhappy with that idea and wish he paid more not less tax so that is a moral issue to consider.

[herethereandeverywhere]

1. The point about owning some assets as a benefit/leverage in a split/divorce is a good one.
   

1. As someone has already mentioned there will be rules about transferring your shares which will be in a document called the articles of association and, possibly another document called a shareholders agreement or investment agreement which you would have to sign (you don't sign the articles, these are part of the constitution of the company - you are deemed to agree to them when you are allotted (i.e.: buy) the shares. Common rules to prevent shares from just being transferred (i.e. sold) to anyone are:
   

i. If you want to sell/transfer you need to send a notice to the company who lets the other shareholders have the chance of buying the shares, alternatively the company may buy them back if a) you were not the only (sole) shareholder and b) the company has enough money to do this (called 'distributable reserves')
ii. the value that you receive for your shares may depend on the circumstances in which you leave. This is usually put in place for those working for the company (a system known as 'good leaver/bad leaver) if you leave early (i.e.: before the company is sold on/worth lots) you would only get what you paid for the shares, even if they are now worth much more because the company has grown.

Whilst there is not likely to be a rule stating you cannot transfer your shares, there may be a situation where no-one is willing to buy them off you, even for a nominal (very small) amount. BUT as I said previously, there is negligible risk attached to being a shareholder. From a hassle factor perspective it may mean you need to do a tax return every year - ask the accountant about this.

1. In response to the socialist/communist point: less tax would be paid because the taxable assets are being spread across the married couple and not just kept with the husband - so whilst it may offend ultra-left wing sensibilities it is a potential victory for equality.

[LotusLight]

On (3) though I would disagree as institutionalising women as housewives by allowing income sharing and capital sharing withing marriages encourages husbands to pressure them to stay home and not earn. Thus also it might seem nice for the couple to have more interest on their savings etc it is not good for equality as it encourages women not to work.

In fact the Tories have said they will not charge any tax on savings interest up to £10k interest a year so if you are paid 0.5% on savings that is interest on about £2m of savings. So that means in practice there will be little point in putting savings in things like ISAs nor in putting savings into the name of a spouse.

[Karoleann]

DH and I have exactly the same thing. It means that I own half the value of the houses in the portfolio, but that the liabilities of the company if there is any claim mean that our primary residence is not in danger.

All good - no issues.....

[YonicScrewdriver]

Op

I don't think there is anything wrong with you being a shareholder. I do think you need to have words with your husband about having enough time and information to make your own decisions, not being raikroaded

[herethereandeverywhere]

Oh I share the assets of marriage AND hold down a job (company/commercial law, can you tell? ) the two are not mutually exclusive.

And for some couples it may work best, and be preferable, for the wife to look after the home and family and the husband to earn the cash - this way she owns some of the rewards of that arrangement too.