Chapter 29 Close company definition

Question 1

29.1 Introduction

Answer 1

A close company is a company which is resident in the UK and controlled by either:
• Five or fewer participators (shareholders), or
• Any number of directors who are also shareholders
Control is established over a company when the above persons possess or are entitled to acquire the greater part of the companies share capital or issued share capital, voting power, distributable profits, or assets distributable on a winding up.
A close company can itself be a participator in another close company.

Question 2

29.2 Directors

Answer 2

A director is anyone who acts as a director. In additions we include any manager of the company who, with their associates, owns 20% or more of the voting shares of the company.

Question 3

29.3 Associates

Answer 3

When determining the level of ownership by one particular shareholder we must also include shares owned by their associates. For close company purposes associates include, parents, grandparents, siblings, spouse, children, business partners (not co-directors), trustees of trusts set up by the individual or any of his immediate family and nominees (individual who owns shares on behalf of someone else).