Director's fund to the company

[Triple5soul]

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?

 

[kirby]

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.

 

[Triple5soul]

What's the pros n cons between director loan to the company and capital injection?thank you in advance.

 

[kirby]

Pro and con for Company or for Director?

 

[Triple5soul]

Pro and con for Company or for Director?

I mean any difference between director loan to company and capital injection to the company if there is fund injected to the company

 

[kirby]

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.