Capitalising directors loan

Share premium only or share issue

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Director (owns 100% of issued share capital) wants to capitalise some of his last directors loan. How does this process work? He doesn't want to issue himself with new shares (dont know why) so is there a way of posting this straight to a share premium account or do shares have to be issued? 

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By johngroganjga
22nd Jun 2020 09:05

He wants to “capitalise“ some of his loan without issuing new shares?

What you need to do first is to sit down with him and find out what meaning he is attaching to the word capitalise, and then explain to him what meaning the rest of the English speaking world attaches to it.

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Ivor Windybottom
By Ivor Windybottom
22nd Jun 2020 10:04

It doesn't seem possible to retrospectively treat the loan as now being part of the share premium, assuming you do not have access to a Tardis.
The director cannot write-off his entitlement to the loan without it becoming income in the company's hands, so it seems you will need to issue some new shares to convert the loan to share capital/premium.

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