Are there any liquid assets?

  • Assessment of the working capital requirements of the business
  • Identification of surplus or investment assets such as investments, property and cash
  • Ability to raise additional finance for example, through sale and leaseback of plant, stock loans, invoice discounting
  • Assessment of the tax consequences of realising assets

Can those assets be extracted from the company?

  • Do the other shareholders and stakeholders agree to the extractions?
  • Does it impact on the directors fiduciary and statutory duties to the company and its creditors?
  • Identification of available methods for extraction, for examples through directors’ loan accounts, dividends, bonuses, employee benefit trusts or sales of shares
  • Assessment of the tax consequences of extracting funds from the company.

Methods of extraction, where cash is available

  • Earnings
  • Dividends if the company has sufficient distributable reserves
  • Drawings, but if a partnership requires the agreement of all partners
  • Repayment of director’s loans to a company
  • Company lends money, but this incurs a tax charge
  • Company buy back of own shares from departing shareholder