Sell or close down a Limited Company?

Ljubus

I have a bit of a tricky decision to make and I'd really appreciate your help and advice. Somewhat impulsively, I formed a LTD company before putting together a proper business plan (never a good idea) and it’s turning out to be a bit of a pain to keep running, so I have a decision to make. I was going to close it down but then I got an offer to sell it. The company never properly traded, so it’s not too much of a hassle to close down, but it’ll cost a few bob versus getting a few bob if I were to sell it.

Here’s the problem though. I’ve heard stories of previous owners/directors being liable for things going astray years later with companies they had sold and long forgotten about. So are those just ghost stories or are there real dangers when selling a company? What should I look out for? Should I ask for indemnity from any future and past issues? Does that even stand up in court? Any and all advice is very welcome and highly appreciated.

TylerIE

Ljubus wrote: »

I have a bit of a tricky decision to make and I'd really appreciate your help and advice. Somewhat impulsively, I formed a LTD company before putting together a proper business plan (never a good idea) and it’s turning out to be a bit of a pain to keep running, so I have a decision to make. I was going to close it down but then I got an offer to sell it. The company never properly traded, so it’s not too much of a hassle to close down, but it’ll cost a few bob versus getting a few bob if I were to sell it.

Here’s the problem though. I’ve heard stories of previous owners/directors being liable for things going astray years later with companies they had sold and long forgotten about. So are those just ghost stories or are there real dangers when selling a company? What should I look out for? Should I ask for indemnity from any future and past issues? Does that even stand up in court? Any and all advice is very welcome and highly appreciated.

Im no legal advisor but IIRC your liability will be considered based on your acts/errors / omissions while you were a director. So if when you sold the company all was above board / paperwork up to date/ debts serviced / etc you should be safe enough. Seeking indemnity from past issues would probably be a good idea but I dont know how it would stand in terms of CRO liabilities.

I believe that the legal responsibility is just to stop people behaving carelessly for years then dumping a toxic company on someone else just before it all implodes.

barneystinson

Ljubus wrote: »

I have a bit of a tricky decision to make and I'd really appreciate your help and advice. Somewhat impulsively, I formed a LTD company before putting together a proper business plan (never a good idea) and it’s turning out to be a bit of a pain to keep running, so I have a decision to make. I was going to close it down but then I got an offer to sell it. The company never properly traded, so it’s not too much of a hassle to close down, but it’ll cost a few bob versus getting a few bob if I were to sell it.

How can a company that's never traded have a value?

Ljubus

Thanks for your feedback TylerIE! It's not like I was intentionally doing anything dodgy with the company, I'm just not 100% sure I did everything I should have in terms of legal paperwork etc. so would not want to find out years down the line I forgot something and have a huge fine to pay.

barneystinson, every company has a certain value as it's not exactly free to form. We're not talking big bucks here, just a few hundred.

barneystinson

Ljubus wrote: »

Thanks for your feedback TylerIE! It's not like I was intentionally doing anything dodgy with the company, I'm just not 100% sure I did everything I should have in terms of legal paperwork etc. so would not want to find out years down the line I forgot something and have a huge fine to pay.

barneystinson, every company has a certain value as it's not exactly free to form. We're not talking big bucks here, just a few hundred.

Your first paragraph above highlights exactly why your second paragraph is incorrect.

If I want a Limited company, and my choice is:
1. paying for a professional company formation, of about €300, or
2. buying a company that somebody already incorporated, and (as you pointed out) may or may not have complied with its legal / tax obligations,

Then it's kind of a no-brainer!

From your point of view, it's clearly better for you if you can get a few quid for the company, but I just can't fathom why anyone in their right mind would be willing to leave their arse hanging out by paying you for the company!

Ljubus

barneystinson wrote: »

From your point of view, it's clearly better for you if you can get a few quid for the company, but I just can't fathom why anyone in their right mind would be willing to leave their arse hanging out by paying you for the company!

Well let's just say they know more about running a company than I do. I don't THINK I did anything wrong, but at the same time I don't know for sure. Am I willing to risk it? Not really. I've paid a large enough fine already for being late more than once, so I guess I'm a bit paranoid now. I think for my sanity's sake, I'll just close this thing down and get a good night sleep.