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Being a director in a company with minority shareholding?

Only for UK Tier 1 (Entrepreneur) points system. This route is now closed to new applicants.

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Being a director in a company with minority shareholding?

Post by sky_rise » Sat Apr 22, 2017 10:53 am

Hi all,

a quick question. I have a company in the UK where i am a majority shareholder that i use for the visa purposes so to say - my main business in the UK which will continue.

I am now in the process of co-founding a LTD company where i would be a minority shareholder, along with other co-founders, who will all own more than me. At the same time i woudl become also a managing director responsible for all corporate activities. So, i am a co-founder, minority part owner, and a managing director (other founders are only majority shareholders and non-execs). I will also be getting some salary out of this company for the monthly activities i perform (so would be other members to the etent of their engagement in day to day running. )

Does this satisfy T1E rules of being engaged in own business only?

regards

SR
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Re: Being a director in a company with minority shareholding

Post by sky_rise » Sat Apr 22, 2017 11:10 am

Here is form the guidance - conditions of stay:

- no employment other than working for the business or businesses that you have
established, joined or taken over but working for such business(es) does not include
any work you do which is effectively employment with another business (for more
details– see Annex A, A41)

technically, i co-establish the business with others. it does not mention the proportion of ownership.

From appendix a:

A41. If you are granted leave to enter or remain as Tier 1 (Entrepreneur) migrant, your leave will
prohibit you from engaging in employment except where you are working for the business which
you have established, joined or taken over. You will comply with this restriction if, for example, you
are employed as the director of the business in which you have invested, or if you are working in a
genuinely self-employed capacity. In this capacity you will have a contract for service.

technically, if you get share at incorporation it means you have invested.
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Re: Being a director in a company with minority shareholding

Post by seasky » Sat Apr 22, 2017 12:30 pm

Shareholding percentage is not a criteria at all, nor is it asked for evidence.

I am not a majority shareholder in my company. Others have invested in my company and collectively own a majority.

You can take salary as long as ur own investment alone is not needed for it. I.e. from -other- investment and or profits

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Re: Being a director in a company with minority shareholding

Post by sky_rise » Sat Apr 22, 2017 12:48 pm

seasky wrote:Shareholding percentage is not a criteria at all, nor is it asked for evidence.

I am not a majority shareholder in my company. Others have invested in my company and collectively own a majority.

You can take salary as long as ur own investment alone is not needed for it. I.e. from -other- investment and or profits
many thanks. but to i understand correctly that you need to have some sort of shareholding?

or, i can be a managing director (and a company director of this new company), without having any ordinary shares and without investing in it? and getting some salary for being a director/ managing it.

once again, it is not going to be my main business, just an additional.
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Re: Being a director in a company with minority shareholding

Post by seasky » Sat Apr 22, 2017 1:32 pm

sky_rise wrote:
seasky wrote:Shareholding percentage is not a criteria at all, nor is it asked for evidence.

I am not a majority shareholder in my company. Others have invested in my company and collectively own a majority.

You can take salary as long as ur own investment alone is not needed for it. I.e. from -other- investment and or profits
many thanks. but to i understand correctly that you need to have some sort of shareholding?

or, i can be a managing director (and a company director of this new company), without having any ordinary shares and without investing in it? and getting some salary for being a director/ managing it.

once again, it is not going to be my main business, just an additional.
That is a Zimba level question. But No shareholding is asked for in guidance and on that level it is fine. But what about genuiness? What entrepreneur does not own a piece of her Business?

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Re: Being a director in a company with minority shareholding

Post by marcnath » Sat Apr 22, 2017 2:33 pm

From the guidance, it appears to be that:
- For proof of money invested, you need to be a shareholder and/or director (for director loan purposes)
- For proof of having employed people, the only test is that of being a director at the time of the employment

Shareholding may be part of the entrepreneurial test (where the criteria is not documented) but otherwise I can't see why it would impact anything else.

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Re: Being a director in a company with minority shareholding

Post by sky_rise » Sat Apr 22, 2017 3:58 pm

seasky wrote:
sky_rise wrote:
seasky wrote:Shareholding percentage is not a criteria at all, nor is it asked for evidence.

I am not a majority shareholder in my company. Others have invested in my company and collectively own a majority.

You can take salary as long as ur own investment alone is not needed for it. I.e. from -other- investment and or profits
many thanks. but to i understand correctly that you need to have some sort of shareholding?

or, i can be a managing director (and a company director of this new company), without having any ordinary shares and without investing in it? and getting some salary for being a director/ managing it.

once again, it is not going to be my main business, just an additional.
That is a Zimba level question. But No shareholding is asked for in guidance and on that level it is fine. But what about genuiness? What entrepreneur does not own a piece of her Business?
thanks very much,

this is a new genuine business - i am just not playing a major role in that compared to other shareholders. and again, it is not my main business at this time.
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Re: Being a director in a company with minority shareholding

Post by sky_rise » Sat Apr 22, 2017 4:00 pm

marcnath wrote:From the guidance, it appears to be that:
- For proof of money invested, you need to be a shareholder and/or director (for director loan purposes)
- For proof of having employed people, the only test is that of being a director at the time of the employment

Shareholding may be part of the entrepreneurial test (where the criteria is not documented) but otherwise I can't see why it would impact anything else.
thank you, i have extended my t1e already and invested/ created all needed employment. for the extension employment purposes i will use my existing main entity.

so it seems it is a green light option i guess.
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Re: Being a director in a company with minority shareholding

Post by seasky » Sat Apr 22, 2017 8:33 pm

Basically u should rephrase ur question. U are using company A as ur main company for visa and it in itself allows ILR.

But can u also do activity B in which u are director? (That should be ur question)


I would think the only remote issue is would it be construed as doing contract work. If u are director and even minor s/h then obviously not.

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Re: Being a director in a company with minority shareholding

Post by zimba » Sun Apr 23, 2017 11:17 am

Being a managing director of a business you did not invest in is a from of employment to me. You are EMPLOYED to run a company as a director.
The logic is that you would run a company you have some stake in, as simply being a managing director is NOT necessarily the same as being an entrepreneur.
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Re: Being a director in a company with minority shareholding

Post by sky_rise » Tue Apr 25, 2017 1:23 pm

thank you all for the valuable inputs.

i then take it as if you are also at least a minority shareholder and engage in running in a company and is a co-founder, that is satisfying the guidance. this is the route i have taken in that case.

thank you

SR
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Re: Being a director in a company with minority shareholding

Post by marcnath » Tue Apr 25, 2017 1:58 pm

[quote="zimba88"]Being a managing director of a business you did not invest in is a from of employment to me. You are EMPLOYED to run a company as a director.
The logic is that you would run a company you have some stake in, as simply being a managing director is NOT necessarily the same as being an entrepreneur.[/quote]

Not necessarily. Many Directors are not employed - especially non-exec ones. But your logic would apply for a Managing Director. And I also agree being an MD (or even a Director) is not necessarily being an entrepreneur - many Directors are appointed for purely advisory roles and are definitely not the entrepreneurial kind.

Similarly, not all entrepreneurs would necessarily be Directors, especially when there are a number of entrepreneurs.

Having said that, the T1E guidelines are quite imperfect. The test for Entrepreneurship is subjective and the criteria for employment creation is that "it has to be in a business you have joined" with the proof of "joining" being that you are Director as listed in Companies house records.

Strictly speaking, it appears you can be an entrepreneur in one company and yet create all the evidence in another company. Personally, I think that would still meet the overall government objectives of the Tier 1 route, so I don't see anything wrong with that.

But not sure how HO's CWs sees it.

I recently came across a white paper on the review of the T1 Visa which is quite interesting - aimed more at ensuring "entrepreneurship/start-up" criteria. It took special aim at the "employment" criteria which is quite demanding for tech start-ups in a world where colloborative way of working rather than strict employment based work is more relevant.

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