I got a customer, a director of a company. The company isnt doing well since it started. so the director was thinking of liquidation. two directors in the company. one has 80% shares, the other has 20% shares. They both contributed 80% and 20% of capitals. One works eveyrday but don't have salary. One doens't not work at all. If they got £10K profit left, and they want to close the company. How to calculate the repayment of the directors loan. Can the one worked claim some salary, as he was working all the way through. Is there any priority to repay anyone?
Thanks
-- Edited by Yuping on Saturday 23rd of February 2013 11:48:35 AM
Bank loan agreements Hp agreements Leasing Agreements Offered securities and personal guarantee's Written agreements between directors Wording of the memorandum & articles ... etc.
Go on Neil, say it I dare you...
etc. what etc? lol
Hope that your having a good weekend matey. Its a bit quiet on the site so I'm sat down with a good riveting read.... First few chapters are about the history of tax in the UK and it's actually a better read than it sounds (#1).
did you know that a saying from the Emperor Tiberius hangs prominently inside 11 downing steet...
"A good shepard should sheer his flock, not skin it".
I like that one.
talk soon,
Shaun.
#1 the book is "Taxation, policy and practice" by Andy Lymer and Lynne Oats.
-- Edited by Shamus on Saturday 23rd of February 2013 07:02:42 PM
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
By the way that the question reads I am taking the profit to mean the current year profit on a company that does not have the funds to meet their existing liabilities including the DLA.
Ignoring the double negative in there I know what you mean but you have gone wrong in your thoughts.
Salary is an expense of the company paid out before the profit is calcualted.
If there is £10k left in the company after all expenses (including salaries) and replayment of all liabilities to third parties (bank, HP companies, finance providers, existing DLA's, etc.). then the split is dictated by the share division which assuming all shares have equal rights the split is 80:20.
Just to emphasise again here. If salary is to be paid to the working director then it is to be taken as an expense before calculating the £10k to be distributed in relation to their shareholding.
As for payment priorities, that all depends upon the wordings of various agreements and such matters need to be left in the hands of an accountant privy to all of the facts. Also worth noting is that their fee's (unlikely to be cheap!!!) will be taken before any distribution of profits so don't think of it as £10k to play with but rather £10k less the salary to the working director, less the accountants fee's.
The directors may have to write off their DLA's and depending on the guarantee's given to obtain loan finance the veil of incorporaion can also be lifted to retrieve the financing plus costs from the directors personally.
As I say, talk to your accountant who will better advise you.
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
