Value of share premium account

Value of share premium unknown on issue of shares.

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I probably should know the answer to this but I'm afraid I'm just not sure.

RTM company. Three shareholders/directors/leaseholders. Incorporated the company with £3 share capital. The also contributed £30k to acquire the freehold. I consider this to be share premium (correct me if you think this is not the case!).

The directors then also contribute £3k for fees in connection with acquiring the freehold. Should this also be considered share premium.

So Dr cash £3k, Cr Share prem £3k

Then on payment of fees Dr fixed asset £3k, Cr Bank £3k

Is this ok?

My reluctance is that when the shares were issued it would not be clear what the value of the share premium would be (ie £11k per share).
Ultimately I think the share capital should be equal to the freehold cost in the accounts. Inherent in the setting up the RTMco was the idea that each shareholder would contribute captial to acquire the freehold. Do I need to see approriate board resolutions? If so the board resolutions would be after the year end - does this make a difference?
(This all happened in one financial year, which may make things easier)

Like I say - I should know the answer to this but I'm afraid I do not and I can't see much help in the companies act or FRS105/102 etc

Replies (7)

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RLI
By lionofludesch
05th Jul 2018 10:07

It's share premium if the directors never, ever want this money back.

But it's Directors' Loans if they do (which is more likely).

Ask the directors their intentions.

Thanks (2)
By Tim Vane
05th Jul 2018 10:16

Why post this anonymously when an hour ago you were happy to post under your pseudonym?

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Replying to Tim Vane:
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By Martin B
05th Jul 2018 14:20

How can you tell this ?

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Replying to Martin B:
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By Wanderer
05th Jul 2018 14:41
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Replying to Martin B:
By Tim Vane
05th Jul 2018 14:45

Two posts an hour apart; both about an RMC with 3 director/shareholder/leaseholders who have just acquired the freehold. I didn't think it was a coincidence.

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Replying to Tim Vane:
RLI
By lionofludesch
05th Jul 2018 14:46

You are Sherlock Holmes and I claim my £5.

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By johngroganjga
05th Jul 2018 10:19

Look at the return of allotments at Companies House. What was the issue price of the shares? £1 each or £10,001 each?

Job done.

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