Our client is involved in the financial services sector, and is regulated by the Financial Conduct Authority (FCA). EQ had observed a growth in litigation in this sector and went to our client to discuss risk management. Over many years, our client had built up more than £1m of cash reserves and also owned the offices from which they traded, worth a further £400k. In the event of litigation that went against our client, they had a lot to lose: everything that they had worked so hard to create over many years.
How we helped our client
The business was wholly owned by a husband and wife team and EQ’s Corporate Finance team met with them to discuss risk management, but also with an eye on exit planning for the future.
The FCA require a minimum capital position to be retained by a registered business. We met with our client to assess the ‘surplus’ assets which we felt required to be protected. Following that meeting, a holding company was created and, with HMRC clearance, the owners transferred their shares in the trading company for shares in the holding company, which became the 100% owner of the trading company. Intra group, the surplus cash and property was transferred into the new holding company meaning that, in the event of litigation, the trading company had only limited assets for creditors to target.
The trade is also now capable of being sold separately and this has allowed our client to more clearly assess their exit options.
For more information or to discuss how we can help you, please contact our Transaction Taxperts.
For further assistance with any corporate finance queries, please contact our Coporate Finance team.