Fund transfer

[Ocean92]

Hi everyone, there is a fund transfer from company A in country A to company B in country B. These two companies are two separate legal entity. The director and shareholders of these two company are the same. Because company A is going to close down soon. So the director intends to transfer cash from company A to Company B. In this case, how do I record this fund receive by company B.
1. loan agreement
I am thinking of loan agreement between two companies but Company A is closing down soon. Can a loan agreement made with a condition without paying back?
2. give as a gift
I think this will be tax impose for company B
3. Can the fund be transfer like this without any contract or agreement? And company B record it’s as an income
Hope to hear your advices
Thank you

 

[Kat Maple]

Hi Ocean92
Do Company A and Company B both have a common parent company?

Kat

 

[Ocean92]

Hi Kat, thank you for your reply! company A and B do not have common parent company! The intention of the shareholder/director (same person) close down company A, company B is recently opened in another country with the same director and shareholders. Nature of business is the same. Is the fund transfer from company A to company eligible without form of the loan agreement or issue of share? How can I record this fund receive in company B!
thank you

 

[Kat Maple]

Hi Ocean92
i see two ways possible. One is for A to return capital to the shareholder then shareholder invests capital in B. The other is for A to invest capital in B then when A is closed down the shareholder receives A’s investment in B. You need to discuss both with tax experts and legal experts since A and B are in different countries.

Kat

 

[Ocean92]

Well Noted. Thank you for your advice!

 

[Ocean92]

Hi Kat, may I ask in case of dividend payout in private limited company with only 1 director and shareholder who is the same person! Do the annual meeting and meeting minute are required for dividend declaration? Thank you

 

[Kat Maple]

Hi Ocean92
That is a legal question which can only be addressed by your legal counsel.

Kat