Setting up a PLC to trade?

[Guest cobibudge]

Hi all!

I’m currently full time employed, however I’m also a very active private investor in terms of shares, bonds, commodities etc etc.

I’ve been doing this for quite a while and I like to think I’ve got some good knowledge, i’ve also made a good profit from it. 2 family members and 1 friend now want to start giving me their capital to invest, as they aren’t too familiar with trading. I want to do this, because it’d quadruple the funds I’ve got to invest with, maximise dividends and further nullifiy dealing costs such as commissions etc - also to be perfectly honest it’s always been a minor dream to run a company in investing, just far more attractive and ‘big time’ than investing personally. 

Of course, they could just give me the money to invest in my personal dealings and I’ll dish out the profits, but they (and I) want something more concrete, efficient and professional.

Please bear in mind I’m a newbie to owning/starting a business, but this is what I had in mind:

A private limited company, with myself as the majority shareholder/CEO and my family/friend being minority shareholders. Shares would be brought through the company (is this possible/easy?), then profits could be distributed depending on the share distribution. I’m not a total **** don’t worry, I do understand this would have greater tax implications! 

I’m asking on here because I can find absolutely no answer to this anywhere else online, I’m not sure if that’s because it’s simply not doable legally, or because it’s not common.

My worry would be being misinterpreted as some sort of investment fund/trust.

Any advice is much appreciated 

[Caseynotes]

Hi @cobibudge, the problem you will run into is that though you don't want to be misinterpreted as a fund/trust that is pretty much exactly what you are thinking of setting up. Wondering why you assume that is automatically a bad thing compared to a plc.

Plenty of fund managers have started small. Research.

[JamesIG]

If you are looking at trading for other people, please check out our limtied power of attourney forms. https://www.ig.com/uk/joint-account-and-power-of-attorney 

All funds traded on in ones own account must be theirs alone. The above is also beneficial when it comes to tax.

[rimmy2000]

agree with the above really. The difficulties lie not in setting up the vehicle or runing the business or account. THer trickiest part would be explaining to close and dear ones what has happened if their investment dips by 50% and they need their capital returned..?

Depending on how much capital we are taking about I'd want some pretty firm legal advice beforehand I think, and agreement on all parties as to the risk, and the rules governing access of that capital. What if one of your party needed the money for an emergency or to buy a property or example? Could you liquidate funds at any point and return the capital. Is this their risk, or will you hold an agreed cash position to cover such needs.

Maybe it is best to get agreement that all money is locked away for a mnimum period? 

I once invested via a friend into their startup via a crowdfund. All has gone quiet and I am not sure if and when I get any of my capital returned..! It is not always a great position to be in and discussions can be a tad awkward. Glad I did not invest a huge amount!

Edit: bear in mind, as a business you will also have certain obligaitons such as employing an accountant to reconcile the books, file statements etc. And their are costs of registering the business and roving the business before you can set up a corporate account.

[Guest PandaFace]

Friends, family, and speculative - potentially risky - monetary investments mix as well as water and oil.

whenever people ask me stuff I give them the facts, tell them my opinion, and let them make their own decision and do their own click...

[247trader]

Yeh reiterate the above. Careful. Given them the crypto option “if this goes to zero don’t blame me”....