Forum Archive Index - March 2002

["Rockbottom" <rockbottom@ihug.co.nz>]

Jerrold, there are a couple of matters in your posting on which I would
appreciate amplification. I have shortened your posting of 8 March.

----- Original Message -----
From: "jerrold poh" <pohj@ihug.co.nz>
To: <sharechat@sharechat.co.nz>
Sent: Friday, March 08, 2002 10:54 AM
Subject: Re: [sharechat] trading shares as a company


> Disadvatage:
> The instant you set up a company, shares that you trade / hold for long
> term, are automatically considered as stock / inventory, meaning you
> have to pay tax on any profits you make.


If a company did no share trading then presumably the stock/inventory method
would not be used and capital gains would not be taxed?


> Also, (and this is the best reason), if you accidentally do something
> stupid, and someone sues you, they can't take your shares.  They can
> only sue you personally, and anything in your company is safe (ie,
> properties, shares, bonds, etc).



You are probably wrong here. "They" would sue you, bankrupt you and your
company shares would be taken over by the Official Assignee and sold or
liquidated. If you want to protect your assets a trust would be a better
vehicle.



>
> And while on the topic of protection, if you buy shares on margin, and
> that goes horribly wrong (ie, you owe the bank heaps), they can only
> take down your company, your family home is safe, and you still have the
> shirt on your back.  The bad side of this is that you can't be a
> director of a company for a few years (5 - 10 i think?), but look at it
> this way, you still have your house, car, etc.  It's all about how you
> want to manage your risk.


Please advise the name of a bank that does not require a personal guarantee
from the directors. Especially a small company owing "heaps" to it..


Cheers


Rockbottom



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