An FIC is usually set up by a ‘founder’ who creates at least two classes of shares:
- The founder’s shares carry voting rights but no rights to capital or income
- Non-voting shares are then given to family members, who have a right to capital and income but no control over the company.
The founder is usually also the director of the FIC. The non-voting shareholders can’t make decisions about investment strategy or the issue of dividends, but they can benefit financially. The value of company assets can be removed from the founder’s estate for inheritance tax purposes.
Non-voting shareholders can be given voting shares later on if this is appropriate (e.g. once minor children become adults), and may be appointed as a director of the company by the founder.
It’s important to draft bespoke articles of association and shareholders’ agreements to regulate which family members can make decisions, and what happens when the shareholders die or when other events occur.