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Private company limited by shares - implications of percentage share

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  • 25-08-2010 12:15pm
    #1
    nice1franko
    Closed Accounts Posts: 2,300 ✭✭✭


    When people (or dragons :D) make deals about taking a percentage share of a business/company ... what exactly does that mean in terms of payment, liability and responsibilities?

    Basically, I'm looking to create a business with several other people but I'm getting lost... I *think* "Private company limited by shares" is the way to go (see here) so say I own 50% of the business and it makes 100k gross profit in a year. Does that mean I'm entitled to 50k at the end of the year?

    Also, if you own a majority share (i.e. more that 50%) does that mean you have any more "control" over the company? Ad if so, how and in what areas? I mean, you can't fire them or anything - so what power could you have?
    Tagged:


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    #2
    TiGeR KiNgS
    Registered Users Posts: 1,435 ✭✭✭TiGeR KiNgS


    your question is very broad.

    here is a very basic start
    http://www.odce.ie/en/media_decision_notices_article.aspx?article=5cce6a7b-12f7-41cb-8d79-a80378182937


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    #3
    Fergal C
    Registered Users Posts: 298 ✭✭Fergal C


    Those are quite complex legal and financial issues nice1franko. If you are setting up a limited company you should sit down with an accountant to go through these issues and any questions you have.

    By the way Gross Profit, is sales less cost of sales and does not include deductions for overheads and tax. Hence, you will not automatically be entitled to a share of the Gross Profit. Also even when a business has a net profit that money may not be available to take out of the company as it could be reinvested or tied up in stock / working capital.


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    #4
    nice1franko
    Closed Accounts Posts: 2,300 ✭✭✭nice1franko


    Henri, sorry, I actually meant net profit there, but, no matter. I understand what you're saying:- no automatic entitlement to any profit. This is actually what I was hoping for although it does lead to another series of questions... I've really got a whole tree structure of questions, each branch depending on the answer to a previous one. I was going to try to figure it out on my own but you're right, I'll need to talk to someone about this.

    Thanks guys.


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