A small company with 2 directors who are also the shareholders(50/50), when the company is being dissolved one director has a slightly higher directors loan balance than the other. When doing the distribution of the retained earnings would it be acceptable to give one director more than the other in order to clear the loan account balances to nil by way of a minute?
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Compnay dissolution
I assume you mean that the direcors loan a/cs are in debit If so surely the higher loan a/c is because that drector has taken more out of the company. Therefore he should get less of the remaining profits.
What your distributing...
... is not the retained earnings, but the assets of the company. I'm also assuming that we're talking about overdrawn loan accounts (assets of the company).
Let's assume director A's loan balance is £100 o/d and director's B's balance is £200 o/d and the company has £500 cash in the bank. Thus the company has assets of £800; £400 to go to each director.
A's loan balance od £100 plus £300 cash goes to him and B's balance of £200 plus £200 cash goes to him. I don't think you actually have a problem.