Hi,
Can the sole Director of a Limited company who has 70% holding and who has not invested any money in the business - but has a Limited Company investor who has paid £15,000 for a 30% share of the business (but no directorship) take cash out of the business bank account ("cash" being cash money drawn from the company bank account using the company's cash card at a cash machine) as a loan which the Director intends to repay at some point in time - without the permission of the investor.
Amount of cash involved taken from the Bank by the Director is £2,000.
If the above is "legal" and above board - is there a date/timescalc by which the money must be repaid?
E
Replies (8)
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What does the agreement with the investor, that the investor took legal advice on before parting with their £15k, say about this scenario?
This is theft, plain and simple. Unless it’s not, in which case it’s absolutely fine. Difficult to be sure either way given the almost total lack of any useful information.
Are you the investor here?
How do you know about the cash withdrawals and have you discussed with the director?
In the absence of any particular agreement with shareholders, a sole director can do more or less what s/he likes. But if monies (cash or otherwise) paid to any party, including a director should be properly recorded in the books. This could be a loan, an advance of wages, for paying suppliers. Or paying a bribe.
As paul.benny says, how this is described depends upon how you record it. Subject to the right declarations on the accounts/HMRC it could be anything you want it to be.
Remember : The Directors are responsible for running the company on behalf of the shareholders and they have the scope to make decisions they view as appropriate to provide a benefit to the shareholders.
Does the loan have interest on it? Also see above comments.