Can Children Own Shares?

Can Children Own Shares?

In the UK there is no statutory provision barring a child from owning shares so, yes they can. A child or minor is defined in England and Wales as being a person under the age of 18.

A lot of companies, especially public companies, often exclude children from owning shares by inserting specific provisions in their articles of association. This is because when there is a call on unpaid or partly paid shares, a child can renounce their obligation to pay by giving up their shares. For a company trying to raise capital this would certainly cause some problems. However in a family owned setting, children owning shares in a company could make sense.

Parents who own businesses often give their children shares to help build their savings from a young age. Different classes of shares with different rights can be established for children giving flexibility to directors as to how the company’s profits are distributed. It can also ensure that children do not have voting rights as they may not be able to make sensible and informed decisions in the company’s interest.

Great care must be taken to have the share classes set up properly and any schemes should be set up with advice from a tax professional.

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