Running your own fund - FSA Regulation

This is a discussion on Running your own fund - FSA Regulation within the Home Trader forums, part of the Trading Career category; OK - here is another question - sort of related. If I form a company and the company places a ...

Reply
 
LinkBack Thread Tools Search this Thread
Old Jan 9, 2004, 5:51pm   #25
 
jls483's Avatar
Joined Mar 2003
jls483 started this thread OK - here is another question - sort of related. If I form a company and the company places a bet either on the horses or a spreadbet - are the profits tax free or will they still be liable to corporation tax? Would any spreadbet companies open a corporate account?

If the company made all of it is profits out of gambling (and they were all tax free) presumably the dividends would still have a tax credit for the shareholders?

Thanks,

John.
__________________
It is better to keep quiet and thought stupid than to open your mouth and prove it.
jls483 is offline   Reply With Quote
Old Jan 9, 2004, 5:52pm   #26
Joined Jan 2003
Would a director of a ltd co be able to legally use company funds to gamble? Could be another sure fire way of getting carted off to the slammer.
darrenf is offline   Reply With Quote
Old Jan 9, 2004, 5:56pm   #27
 
jls483's Avatar
Joined Mar 2003
jls483 started this thread Obviously it would be with the shareholders blessing
__________________
It is better to keep quiet and thought stupid than to open your mouth and prove it.
jls483 is offline   Reply With Quote
Old Jan 9, 2004, 6:12pm   #28
Joined Jan 2003
I still think there could be something lurking in directors duties and gambling with company funds.

Don't know for definite. just a hunch.
darrenf is offline   Reply With Quote
Old Jan 9, 2004, 6:31pm   #29
 
Scripophilist's Avatar
Joined Jul 2003
Thanks to wysinawyg for his clarity on this thread. The shareholder options seems most sensible.

I don't believe there is any specific rule about gambling with funds. It could be defined as a hedging strategy but would certainly be seen as unusual unless you apply for a betting license etc. etc.

You could always loan money from the company to yourself and then repay it again and redistribute the proceeds as a gift or something?
Scripophilist is offline Other (Please email T2W with details)   Reply With Quote
Old Jan 9, 2004, 9:07pm   #30
 
jls483's Avatar
Joined Mar 2003
jls483 started this thread A small request before I put my next question 8-). What I am about to ask might seem a little odd and from experience I expect one or two might be tempted to ask why on earth I want to work like that - but if you could just humour me as a bit of a nutter and just answer the theoretical question - I would be most grateful.
Thanks.

BTW If you are not interested in companies, dividends and running funds - now might be a good time to leave the thread 8-).

Ok - let's imagine I've created my new company. I'm trading the FTSE futures using the companies IB account. I've got a strategy (a little unconventional) that sets the base price of my share as:
(5000-ftse)^2 / 1,000,000 e.g. if the ftse is at 4500 then the share is worth 500^2/1000000 = -.25 and if the ftse is at 4000 it is worth -1.00. Each share pays out a dividend of 3p a month.

I need to create a system where my mates can decide how much they want to pay for each share based on how low they think the FTSE might fall. The higher they assume, then the less they need to pay for each share and the better their returns will be.

If for example the FTSE is at 5000 and has a value of zero and they pay £1 a share then they can afford to let the FTSE fall to 4000. If it does fall to 4000 then they can either see their shares liquidated or they can pump in more cash.

That's the scenario I am trying to create - how I do it - I don't mind.

Here is the best idea I have had so far:

I split the shares (on paper - not with companies house) into various flavours each share covers a fall to a certain value e.g. to 90% of 5000, 80%, 70% and so on. The cost of each share is basically equal to:

the price of a fall from 5000 to the bust value plus
the cost of the current fall from 5000 plus
any profits that have built up in the fund and will be paid out as a dividend at the end of the month

So the base price of the 90% fund is 25p. The fund will be worth 25p-0p=25p when the FTSE is at 5000 and 25p-25p=0p at 4500.

The base price of the 80% fund is £1 and the fund will be worth £1-0=£1 at 5000, £1-25p=75p at 4500 and £1-£1=0p at 4000.

The cost of upgrading between the fund flavours is just the difference in the base price of the units, which in the case of the 90% and 80% funds is 75p.

It is a system that would work on paper - I'm just not sure if companies house and the inland revenue are going to be happy that shares come in different flavours and cost different amounts.

Any suggestions - gratefully received.

John.
__________________
It is better to keep quiet and thought stupid than to open your mouth and prove it.
jls483 is offline   Reply With Quote
Old Jan 9, 2004, 10:48pm   #31
 
sandpiper's Avatar
Joined Sep 2003
jls483,

"It is a system that would work on paper - I'm just not sure if companies house and the inland revenue are going to be happy that shares come in different flavours and cost different amounts".

No they won't be happy about it.

Whilst the limited company route seems like an appropriate method you need to be extremely careful, especially with regard to the new(ish) anti avoidance legislation known as Section 660.

This may not affect you since it is primarily targeted at small companies with profits less than 300k and you suggested that you would fall outside of this area. Worthwhile checking though.

Main suggestion would be (obviously) to find a decent accountant specialising in this area. A good starting point may be www.accountingweb.com.

Good Luck.
sandpiper is offline   Reply With Quote
Old Jan 10, 2004, 12:24am   #32
 
wysinawyg's Avatar
Joined Apr 2002
You definitely can't do it as put. All shareholders with identical shares have to be treated equally, thats basic company law.

Why not just have different classes of share though all done officially with companies house?

You can give them all the same voting rights and dividend rights but just change the redemption conditions (you'd be using redeemables probably rather than ordinaries as otherwise it is a pain in the what nots for people to get their money out) to do what you want.

(although that isn't to say there isn't some specific problem I don't know of that you'd come across)

wysi
__________________
"What you see is not always what you get"
wysinawyg is offline   Reply With Quote
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Similar Threads
Thread Thread Starter Forum Replies Last Post
Forex and UK Tax Regulation yippeeyo Forex 9 Jan 2, 2014 3:27pm
Compliance/Regulation kenhetherington General Trading Chat 2 Jun 3, 2006 9:25pm
Moderate Self Regulation Forums fxmarkets T2W Feedback & Announcements 30 Dec 6, 2005 4:23pm
regulation in swiss? kako Forex 3 Aug 30, 2005 4:08pm
Dow ...Time is running out ! Peter Indices 2 Dec 16, 2004 8:43pm

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)