Returning Share capital

Returning Share capital when closing a company

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Hello Guys.. I have a client who had investment into his company through crowd funding. The investors has paid a nominal price and a premium for the shares. The company unfortunately did not do well. They had some stocks and this has been sold and the director ( main shareholder) has agreed to return proceeds to the investors and close the company by sending a DS01. My question is how does the accounting entries work and what forms that needs to be completed. Can this be considered as a purchases of own shares by the company? Do they have to complete a share transfer form? the company has carried forward losses, and once the investors are paid the director wants to close the company. Would appreciate your input.

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By johngroganjga
25th May 2018 10:17

No share transfer forms because no transfers are taking place.

Accounting entries are irrelevant as the company will not be preparing accounts after it has repaid its share capital!

Not its not a purchase of own shares by the company, it's the distribution of the company's assets to its shareholders upon its dissolution.

If the company has suffered losses how can the shareholders be repaid what they invested?

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Replying to johngroganjga:
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By pfconsult
25th May 2018 11:00

Thanks John. Director has invested funds into the company and not getting his investment back. The investors are getting only 25% of their investment. They had some carried forward losses - Financed by the director. Now they have realised some money for the stocks so the proceeds are distributed.

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