Guidelines to follow when purchasing shares in an unquoted company
An unquoted company refers to a company that is unlisted in any recognized stock exchange market. Such a company usually concerns itself with matters pertaining to payment of pension schemes. Buying shares in an unquoted company can be potentially rewarding. The trick lies in identifying a business that has a proven success record. This guarantees you that it will not go down when things get tough as is currently the case with most companies in light of the economic crisis.
Leaders of such an unquoted company ought to be reliable and trustworthy. You need to be able to trust and rely on them to steer the company into good fortunes and away from any trouble especially from the government. Moreover, the initial price at which you buy your share ought to be fair and should come at an irresistible bargain. It should however be noted that the main purpose of such a company is not to deal with pension schemes for the purpose of selling unquoted shares. This could be considered criminal under the various statues dealing with tax.
Commonly used self- investment schemes aimed at providing a business with liquidity either as a direct loan from the scheme or by buying stock in the company; are SSAS and SSIP. Several guidelines have been put in place which someone must comply with before purchasing shares in an unquoted company. For instance, when buying shares in an unquoted company, SSAS is confined to exactly five percent of the total scheme value. SSIP on the other hand has no such confinements.
Furthermore, the pension scheme is prohibited from investing in any taxable e.g. a house and mobile asset for instance a vehicle belonging to the company; unless through using an approved alternative usually another company. Failure to comply with these set guidelines results in unannounced tax charges, unless the said assets, either taxable or mobile have a value not exceeding $6000. Assets exceeding this value are fined a tax charge of about fifty five percent of the asset’s total value.