Preparing Share Structure for External Investment

[pablom]

Hello,

Apologies for posting in the general forum- I did not see this fitting on other topics.

I should also say I have asked the following question of our external company accountant- who either does not want to, or is unable to answer my query. Hopefully someone here can help...

So we have an active limited company, with 2 shares in issue, both nominally valued at £1- one to me, and one to my business partner.

In the next 6 months, we will be looking to get external investor(s) on board- seeking approximately £500k for hopefully 40-50% of the business. We also have an employee share scheme in place which means we will want up to 0.01% resolution for company ownership split.

We wish to allow investors to use the SEIS scheme- we have not got trading activity yet and are just doing business on grant money and director loans. For the record, I am aware the SEIS scheme is only available on newly issued shares and limited to £100k per investor (hopefully we can find 5!).

To me this means we may want up to 10,000 shares in the business to give the shareholding split we want, my query is regarding whether the business needs to do any preparatory restructuring of the shares ahead of any issued for external investment. Here we go.....

Subject to the mems & arts of the the company, in principal, will the business be able to issue all the shares required at the time of gaining investment at a nominal value of 1p per share to minimise share capital, with


- the new shares issued to the investor(s) having a share premium to reflect whatever deal(s) we make

and


- the new shares issued to the directors having no premium and just nominal value of 1p? Needless to say the directors don’t want to have to invest share capital at the same rate as the external investors! Or even indeed if each share remained at £1 nominal value.

Or

is there any merit in in changing the share structure now, while the company share market value is still technically close to zero? For example making the current 2 x £1 shares into 5000 x £0.01 shares (if this is even possible) via a SH02 form?

In this second scenario we would still issue further new shares to the investor(s) when a deal is struck, therefore hopefully making them qualifying for SEIS (assuming everything else meets the scheme criteria).

Many thanks in advance for any help,

P.