Shareholder in Administration

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awwallace22
awwallace22 Registered Posts: 35 Regular contributor ⭐
in General accounting discussion
I need some help on this. I have a Ltd co. client for which I am compiling their annual a/cs. One of the shareholders has gone into administration. How do i go about showing this in the finalised accounts for Companieshouse/HMRC etc. Is it a matter of putting a note in the accounts. Do I need to make some kind of provision. Im a bit stuck on this as I have never had this situation before. Any input greatfully rec'd, thanks.

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  • Hasan.Ahmet
    Hasan.Ahmet Registered Posts: 87 Regular contributor ⭐
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    Dear MIP
    If you could explain a little more what you mean by
    "One of the shareholders has gone into administration"
    I'm sure someone may have an answer to help you.
  • Jon_1984
    Jon_1984 Registered Posts: 186 Dedicated contributor 🦉
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    I guess the big question is will it affect the Ltd companys ability to carry on as a going concern?

    The only reason I could think of* for this being the case is if the creditors tried to gain control over the shareholders stake as one of its assets and do something the other shareholders are not happy with? Im not sure what other effects there could be under the seperate legal entity basis, but guess % shareholding could influence the decision.

    (*scratching back to A-level business studies i seem to remember shares in Ltd Co. can only be traded/sold with consent of other shareholders, unlike a PLC that can be traded on the open market)

    Sorry if this seems a bit of a waffle but hope it might suggest some lines of enquiry to check up on.
  • JodieR
    JodieR Registered Posts: 1,002 Beyond epic contributor 🧙‍♂️
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    I presume that you mean that the shareholder has been declared bankrupt. If so, this person cannot be a company director during their bankruptcy and if the shares he/she holds in the company are worth a significant amount he/she may be forced to sell them so contribute to the distribution to creditors. I don't think there would be any requirement to declare the bankruptcy in the accounts if the person in question is not a director.
  • deanshepherd
    deanshepherd Registered Posts: 1,809 Beyond epic contributor 🧙‍♂️
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    As an individual cannot go into 'administration' I assume you are talking about a corporate shareholder?
  • awwallace22
    awwallace22 Registered Posts: 35 Regular contributor ⭐
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    Yes the shareholder is a Ltd company.

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