Director Investments & Shares

Sue_Blood

I have a client who is a Limited by shares company in their second year of trade. The directors have both invested additional capital in year 2 in the same proportions as the ordinary shares issued at formation. They are asking if they can add the new investment to the existing share premium on the original ordinary shares issued at formation. My initial thought was that they have to issue further shares but want to gather views before I go back to them.

douglasstroud

If they are only Directors then they will not have shares, only shareholders do.
If they are also shareholders what benefits do they expect to get from adding to their shareholding? Would loaning the money to the Company be better?

Sue_Blood

Yes they are shareholders. I guess there could potentially be implications for their personal tax position if they call it a loan. I'm not sure whether it is, from a statutory accounts point of view, correct to increase the share premium on existing shares or whether new shares have to be issued.