Company M (Incorporated 2000) has a net asset value of €4 million – goodwill is not an asset in the company.
The company has two directors/shareholders:-
Director/Shareholder A owns 1 ordinary share and 9 preference shares
Director/Shareholder B owns 1 ordinary share
The ordinary shares have equal voting rights.
The preference shares plus the ordinary shares determine ownership. Therefore Director/Shareholder A owns 10/11 of the company and Director/Shareholder B owns 1/11 of the company.
Director/Shareholder B died on 19th April 2016.
In order to settle the affairs of Shareholder B, Shareholder A has agreed that the company would pay the estate of shareholder B the sum of €500,000 to buy back the shares .
1. What are the tax implications for the company.
2. What are the tax implications for the widow of Shareholder B
3. Are there any other implications.
Many Thanks for your help.