I suspect this could potentially open a can of worms if there was any value in the company as the share value could not be nil but that's another story.
The £700 you refer to as paying company bills - do you mean liabilities such as suppliers? If so, I would journal the DLA balance to the bank account then pay the bills to the bank account resulting in nil effect, clearing the DLA and everyone's happy. I would assume that the shares are not seperated on the BS? If not, then no action here but certainly you would need to do a stock transfer form (and signed by both parties) and initiate the share transfer when you come to do the annual return.
