Injecting capital into a Limited Company

[Razor]

Hello,

I have arranged a meeting with an accountant to discuss possible scenarios but I would like to maximise that (and therefore value ) time by trying to get the noddy questions answered or least have a better idea prior to our meeting.

The main question is how do you add capital to your limited company in terms of procedures?

For example, say I write a cheque for 5000 pounds and place it within the company's bank account - do I create a bunch of shares and assign them to myself or is there a different or perhaps a more effective way of doing it? If I do create some shares - what are the procedures/forms required to do so and who would I have to notify/what type of record do I need to record.

Secondly, is there any limitation in terms of time or amount of times I can place capital into the company?

Any feedback on this matter will be gratefully appreciated.

Best regards,

Mark

[Joyous]

A company can issue shares as and when it pleases up to the maximum as specified by its authorised share capital. If you’re the only shareholder then it’s pretty straightforward. It’s basically a case of putting the money in the bank, issuing yourself a share certificate detailing the shares allotted, and then sending form G88(2) to Companies House within 1 month of allotment. Your accountant should be able to give you the full, detailed version.

If there are other shareholders you need to check if they have pre-emption rights and that you have the authority to allot the shares.

Is it definitely the case that you want to increase the company’s share capital or that you simply wish to inject some cash into the company to increase it’s working capital? If it’s the latter the simplest thing would be to record the cash injection via the director’s loan account.

Regards

Joy

[Razor]

Thanks for the reply - actually its just the latter. The Company has been none trading and now I am in a position to trade so want to give it some working capital. Are there any people/records (eg tax, companies house) I need to notify to give the company a 'director's loan' or is it straight forward enough to write a record/agreement between myself/company and just place the funds within the bank?

Best regards,

Mark Barnes

[Joyous]

Unless you need to stipulate terms it's not really necessary to draw up an agreement although it's adviseable to record it in the minutes. Then you simply pay the money into the bank and in your accounts debit the bank account and credit the director's loan account. That's pretty much all there is to it.

Regards

Joy

[Razor]

Hi Joyous,

thanks for the info - much appreciated!

Mark