A Legacy Intact: safeguarding your family business in the event of divorce - Book - Page 81
Family investment companies (or
may carry voting rights and others
‘FICs’) are simply private limited
may not. Dividends will be paid
companies used to hold family
by the board and so if the voting
investments. They became more
provisions are carefully structured,
prominent when changes to tax
control over which family members
law
of
receive dividends can be managed
holding such investments in trusts.
to avoid creating regular income
eroded
the
advantages
streams. A regular dividend income
L I K E T R U S T S , FA M I LY I N V E S T M E N T
COMPANIES CAN BE SE T UP TO RING-FENCE
FA M I LY A S S E T S .
E S T A B L I S H I N G A FA M I LY I N V E S T M E N T
COMPANY CAN ALSO ACT AS A USEFUL
T R I G G E R T O A S K S P O U S E S O F FA M I LY
M E M B E R S T O S I G N P O S T- N U P T I A L
AGREEMENTS
They are often an option that is
can be treated as a resource and so
worth exploring for wealthy families
for some family companies it has
following the sale of a family
‘paid dividends not to pay dividends’
business. The company can be
from
used to hold the proceeds of the
perspective.
matrimonial
protection
sale, which are then invested for the
We often find that the creation of a
benefit of family members.
FIC following the sale of a business
Like trusts, FICs can be set up to
is also an appropriate time to ask
ring-fence family assets. The articles
spouses of lineal descendants to
of association of the company
sign up to post-nuptial agreements,
can be drafted to restrict non-
which
lineal descendants from becoming
challenging to raise.
shareholders.
classes,
Different
including
redeemable,
otherwise
be
quite
ACCORDING TO THE
I N S T I T U T E F O R FA M I LY
BUSINESS RESEARCH
2 0 1 9 , FA M I LY
BUSINESSES EMPLOY
OVER 14 MILLION
PEOPLE, AROUND 40%
OF ALL EMPLOYEES
ACROSS THE WHOLE
ECONOMY
ordinary shares can be created that
can to an extent provide some of the
flexibility offered by trusts where
beneficiaries are granted different
interests.
can
share
preference, or different classes of
80
a
Some share classes
81
