Ask an expert: Purchase of own shares

Question

My client holds 20% of the shares in a profitable trading company and wishes to retire leaving the remaining shareholders to manage the company. The other shareholders do not have sufficient funds to purchase the shares from my client directly and are reluctant to take on personal borrowings. A sale of the shares to a third party is also not acceptable to the other shareholders. Is there a tax efficient solution to this problem?

Answer

A company purchase of own shares is useful for dealing with succession planning in owner-managed businesses and could be a solution in this case. The purchase consideration would be satisfied by the company...