Purchasing property business
Posted: July 9th, 2017, 10:47 pm
I am in the early stages of buying a commercial property (small hotel) and neighbouring residential units. Title to all the property is held by a limited company whose shares I am proposing to buy from the current shareholders. The assets and company are in an overseas country whose law is close to English law.
The proposed heads of terms state that at purchase the only liabilities of the company will be " residual shareholder loans". AFAIU the operation of the Hotel was NOT carried out by the company, the hotel being leased to third party operators.
This is the first time I have purchased a controlling stake / all the shares in a company. So a few rookie questions:
1. I assume that on purchase I as the new director can simply pay off the residual shareholder loans using the funds of the purchased company. But why can't the current directors deal with those loans now? I presume because liquid funds are not available... is that logical?
2. What documents can I demand to view to satisfy myself that there are no further liabilities? I of course don't want to end up liable for unpaid taxes, municipal debts or other claims on the company. Puchasing the shares on the face of it looks like less hassle than transferring the properties themselves, but I'm somewhat aware of the pitfalls.
3. What documents and actions should I take to ensure that the assets claimed to be held are in fact held and unencumbered? Is it enough to obtain copies of title deeds from the land registry?
4. Although conveyancing is not necessary, I intend to carry out local authority searches and obtain structural surveys. What other due diligence is essential?
Thanks in advance.
GS
The proposed heads of terms state that at purchase the only liabilities of the company will be " residual shareholder loans". AFAIU the operation of the Hotel was NOT carried out by the company, the hotel being leased to third party operators.
This is the first time I have purchased a controlling stake / all the shares in a company. So a few rookie questions:
1. I assume that on purchase I as the new director can simply pay off the residual shareholder loans using the funds of the purchased company. But why can't the current directors deal with those loans now? I presume because liquid funds are not available... is that logical?
2. What documents can I demand to view to satisfy myself that there are no further liabilities? I of course don't want to end up liable for unpaid taxes, municipal debts or other claims on the company. Puchasing the shares on the face of it looks like less hassle than transferring the properties themselves, but I'm somewhat aware of the pitfalls.
3. What documents and actions should I take to ensure that the assets claimed to be held are in fact held and unencumbered? Is it enough to obtain copies of title deeds from the land registry?
4. Although conveyancing is not necessary, I intend to carry out local authority searches and obtain structural surveys. What other due diligence is essential?
Thanks in advance.
GS