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Can a child own shares?

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 preetham asked over 2 years ago

Hi I want to know, Can a child own shares?

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5 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 narahari answered over 2 years ago

In many family owned companies, shares are allotted to children as a means of providing them with capital assets which may be expected to increase in value as part of longer term inheritance and capital gains tax planning. Paying dividends on such shares can also be useful ways of using childrens' personal allowances for income tax, and to make use of the lower tax rates applicable to dividends. In many such cases, different classes of shares are set up so that the child may, for example, have non-voting shares or, very commonly, the articles allow the directors to pay different rates of dividends on the various classes, giving flexibility as to how the company's profits are distributed. Such schemes should only be set up with professional tax advise, and great care must be taken to have the share classes set up properly. Company Law Solutions can set up and issue the classes of shares.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Anil Dhawan answered over 2 years ago

There is no statutory provision prohibiting a child from owning shares. At common law a child will not be bound by a contract to buy shares as they are not 'necessaries'. That may make it difficult to enforce payment for the cshares against a minor. Some companies will not accept shareholders under the age of 18 years by provision in their articles or terms of issue. In many family owned companies, shares are allotted to children as a means of providing them with capital assets which may be expected to increase in value as part of longer term inheritance and capital gains tax planning. Paying dividends on such shares can also be useful ways of using childrens' personal allowances for income tax, and to make use of the lower tax rates applicable to dividends. In many such cases, different classes of shares are set up so that the child may, for example, have non-voting shares or, very commonly, the articles allow the directors to pay different rates of dividends on the various classes, giving flexibility as to how the company's profits are distributed. Such schemes should only be set up with professional tax advise, and great care must be taken to have the share classes set up properly. Company Law Solutions can set up and issue the classes of shares. Public companies often provide that minors may not hold their shares. Such shares are often held by parents or grandparents, etc. as trustees for children, or some form of investment trust is used.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Chirag answered over 2 years ago

**Can a Minor Child Be a Shareholder in a Corporation?** Small business owners sometimes set up the family business as a corporation. It may make sense to allow every family member to have a stake in the company, even your minor children. While making a child a shareholder in a corporation may seem like a good idea, you should be concerned about the legality of children owning shares in a corporation and the practical issues that can arise when corporate shares are placed in the hands of minors. Ads by Google Small Investment Options Invest in best SIP plans in just 2 Mins & avail high returns. www.myuniverse.co.in​/​ZipSip Shareholder Defined Corporations are independent legal entities that are formed and managed under state law. A state's corporation statute defines who can be a shareholder. Under state law, a shareholder is any person who is registered on the books of a corporation as the owner of shares. It further defines a “person” as any natural person or entity, without any restriction, such as age or nationality. Basically, a shareholder is any person or legal entity that is allowed by law to own personal property, which is how the IRS classifies shares of stock. Minor Shareholders People under the age of majority can own personal property in their own name, although a person's minority status may affect his ability to use the property. Since corporate law does not restrict ownership of shares to adults, stock in your small corporation or family business can legally be placed in the minor's name by recording the child as the registered owner of the shares in your corporation's stock register. Related Reading: What Happens When a Shareholder Invests Cash in a Corporation? Exercising Ownership Rights A minor child can own shares of a corporation, but the child may not have the ability to vote his shares or effectively manage his interest, potentially causing a problem if the child's interest becomes pivotal in a dispute between the adult shareholders. A corporation functions by majority vote of the shareholders who select directors for the board and make decisions on major actions. In a small corporation, the shares are typically held by a limited number of people, making every vote important. You may need to put a proxy agreement in place to allow an adult to vote the child's shares until he comes of age. Other Considerations There are many ancillary issues to consider when placing shares of stock in a minor child's name that go beyond the ability of the child to own the stock. A child may have no ability to capitalize his interest in the company, which can be an issue if the ownership structure of the company is ever challenged by other shareholders. If you gift the shares to the child to avoid the capitalization issue, the annual tax limitations on gifts may become an issue. Also, when you distribute profits by issuing dividends, the child will be entitled to his fair share. If the amount of dividends exceeds the annual amount of income that children are allowed to earn without tax consequences, the child may be required to file a federal income tax return.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 HIMANSHU answered over 2 years ago

Corporations are independent legal entities that are formed and managed under state law. A state's corporation statute defines who can be a shareholder. Under state law, a shareholder is any person who is registered on the books of a corporation as the owner of shares. It further defines a “person” as any natural person or entity, without any restriction, such as age or nationality. Basically, a shareholder is any person or legal entity that is allowed by law to own personal property, which is how the IRS classifies shares of stock. Minor Shareholders People under the age of majority can own personal property in their own name, although a person's minority status may affect his ability to use the property. Since corporate law does not restrict ownership of shares to adults, stock in your small corporation or family business can legally be placed in the minor's name by recording the child as the registered owner of the shares in your corporation's stock register.

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Open uri20170510 32134 1uwcnoc?1494421631 Shubhangi Jain answered over 2 years ago

Can a child own shares? ----------------------- There is no statutory provision prohibiting a child from owning shares. At common law a child will not be bound by a contract to buy shares as they are not 'necessaries'. That may make it difficult to enforce payment for the cshares against a minor. Some companies will not accept shareholders under the age of 18 years by provision in their articles or terms of issue. In many family owned companies, shares are allotted to children as a means of providing them with capital assets which may be expected to increase in value as part of longer term inheritance and capital gains tax planning. Paying dividends on such shares can also be useful ways of using childrens' personal allowances for income tax, and to make use of the lower tax rates applicable to dividends. In many such cases, different classes of shares are set up so that the child may, for example, have non-voting shares or, very commonly, the articles allow the directors to pay different rates of dividends on the various classes, giving flexibility as to how the company's profits are distributed. Such schemes should only be set up with professional tax advise, and great care must be taken to have the share classes set up properly. Company Law Solutions can set up and issue the classes of shares. Public companies often provide that minors may not hold their shares. Such shares are often held by parents or grandparents, etc. as trustees for children, or some form of investment trust is used. Note that there is now a restriction on children being directors of companies. A director must be over the age of 16. Company Law Solutions provides an expert service for all your company law requirements, including advice about classes of shares, share allotments and transfers.

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