A shareholder with 250 shares sells shares to another shareholder (also a director) for £2000. The nominal value of the shares is £1 per share. The shareholder selling the shares also has £12,000 as other creditor balance. He agrees to eliminate the £12,000 balance in return for £2,000 for his 250 shares.
The transfer of £2k happens between the shareholder, would any of this transaction need to be reflected in the company accounts? Would I need to record the £1,750 anywhere? (£2000-250). Or do I carry this forward as a new other creditor?
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From what you say the vendor is receiving £2,000 not just for 250 shares but also for his £12,000 loan balance.
You will need to look at the sale agreement very carefully to be sure, but I would guess that the loan is being assigned to the purchaser.
So if that is the case, the only accounting entry for the company is to move the loan. It also needs to record the transfer of shares of course, but that is in its register of members, not in its accounting records.
Eh?
There is no entry in the company's accounts for a transfer between two shareholders.
There will have to be an entry in the company's accounts for the waiving of the selling shareholder's £12,000 loan to the company. DR Other creditors CR P&L with £12,000.
Tax issues
Your questions relates to accounting issues, I assume you have addressed the tax issues, so whether they are employment-related securities requiring a Form 42 and a s431 election. And of course stamp duty will be payable.