Director's fund to the company

Discussion in 'General Accountancy Discussion' started by Triple5soul, Jul 28, 2017.

  1. Triple5soul

    Triple5soul

    Joined:
    Jul 27, 2017
    Messages:
    5
    Likes Received:
    0
    if a company has 2 directors, one of them inject money to the company. Do I consider this is director loan to the company or capital injection? Any board resolution to raise in either matter? Any difference if this is private limited company, holding limited n limited company?
     
    Triple5soul, Jul 28, 2017
    #1
    1. Advertisements

  2. Triple5soul

    kirby VIP Member

    Joined:
    May 12, 2011
    Messages:
    1,422
    Likes Received:
    197
    You have to ask the director this question and ask for the answer in writing (email). If it is a loan, get the interest rate and the repayment terms.

    A loan should have a resolution to borrow money. Capital injection should have a resolution as to whether this is for new shares and how many or is paid in capital to existing shares.

    No difference in the type of company matters.
     
    kirby, Jul 28, 2017
    #2
    1. Advertisements

  3. Triple5soul

    Triple5soul

    Joined:
    Jul 27, 2017
    Messages:
    5
    Likes Received:
    0
    What's the pros n cons between director loan to the company and capital injection?thank you in advance.
     
    Triple5soul, Jul 29, 2017
    #3
  4. Triple5soul

    kirby VIP Member

    Joined:
    May 12, 2011
    Messages:
    1,422
    Likes Received:
    197
    Pro and con for Company or for Director?
     
    kirby, Jul 31, 2017
    #4
  5. Triple5soul

    Triple5soul

    Joined:
    Jul 27, 2017
    Messages:
    5
    Likes Received:
    0
    I mean any difference between director loan to company and capital injection to the company if there is fund injected to the company
     
    Triple5soul, Jul 31, 2017
    #5
  6. Triple5soul

    kirby VIP Member

    Joined:
    May 12, 2011
    Messages:
    1,422
    Likes Received:
    197
    There is no simple answer that is always correct.
    Example: Capital injection does not add to debt load of company, but may be in violation of charter terms, or shareholder dilution agreement or bank agreement.
    So, only a person with full info on debt covenants and charter terms can decide whether debt or capital is better.
     
    kirby, Jul 31, 2017
    #6
    1. Advertisements

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments (here). After that, you can post your question and our members will help you out.