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Converting Director Loan to Share Capital

What is the process

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We submitted the accounts of a Limited company (property) last month but now the director wants to convert the director loan to share capital to strengthen the balance sheet since he is trying to raise capital

The client wants us to amend the accounts.  His mortgage advisor has also questioned why we didn't convert the director loan to share captial  (even though we did mention this to the director at the time). You cannot backdate the issuance of share capital ?

What is the process of converting director loan to share capital.  Is any additional paper work required ?

 

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By johngroganjga
17th Jun 2020 12:59

The first thing to say is that you can’t do it retrospectively.

As to how to do it, if there is only one shareholder all you need is form SH01.

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By GlobalTax
17th Jun 2020 13:47

johngroganjga wrote:

The first thing to say is that you can’t do it retrospectively.

As to how to do it, if there is only one shareholder all you need is form SH01.

Thanks John - Is it good practice to issue a written resolution when increasing share capital ?

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Replying to GlobalTax:
By johngroganjga
17th Jun 2020 14:11

If there is more than one shareholder, yes of course you must go through the proper procedures to be able to evidence that there is the requisite majority in support.

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By johngroganjga
17th Jun 2020 13:00

.

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