Investment by director loan

After seeing huge interest in this topic, I am going to start this thread to help all those who are looking for information on this topic. Please contribute here on this topic. Please remember my only intention is to help and clear doubts and confusions. Please only input HO and not your own version of UKBA rules.

Below are the points which all support investment by unsecured director loan.

A19. Direct cash investment In order to ensure that the money is used by the business, you
should provide the accounts of that business for assessment. These accounts must show the
investment in money made directly by you, in your own name.
Share capital This only applies to migrants with a company structure that can raise money
through shares.

Director’s loan This only applies to migrants who become directors of a company. A director’s
loan to the company will be considered for the award of points as long as it is unsecured and
subordinated in favour of third-party creditors. (For the purposes of this guidance an unsecured
loan is where you have loaned money to the business that is not secured by property or assets
that become subject to seizure on default. Third-party creditors are those individuals or companies
that the business owes money to, not including you.)

As per above full director unsecured loan will be considered for award of points.


74. The amount of money invested should not:
• include the value of any residential accommodation or property development, or
property management; or
• be in the form of a director’s loan, unless it is unsecured and is subordinated in favour
of the third-party creditors.

As per above investment is acceptable in form of unsecured director loan.


According to Paragraph 41 (d) of Appendix A in the immigration rules.

(d) The money will remain available to the applicant until such time as it is spent in the establishment or running of the applicant’s business or businesses. ‘Spent’ excludes spending on the applicant’s own remuneration. The UK Border Agency reserves the right to request further evidence or otherwise verify that the money will remain available, and to refuse the application if this evidence is not provided or it is unable to satisfactorily verify. ‘Available to him’ means that the funds are:

This (d) is saying that money must be available until it is spent. As long as money is available in business account, you are covered. Later part of it tells us that what is included and what is not included in spending. It does not give directions to how much to spend or you must spend.

A20. A loan to the business will not be accepted The investment should not be in the form of
a Director’s loan, unless it is unsecured and subordinated in favour of third-party creditors. We
will use any legal agreement between you and the company to assess this. If no legal agreement
is provided or if the investment appears to be in the form of a loan which does not meet these
conditions, no points will be awarded for this investment.

Again and again even in above A20, HO is saying director unsecured loan is accepted for investment.


Now finally go to attributes section for extension,point no.67 in policy guidance.

A. You have invested, or had invested on your behalf, not less than £200,000 (or
£50,000 if, in your last grant of leave, you were awarded points for funds of £50,000)
directly into one or more businesses in the UK.
20 Points


It is clearly saying investment not spending. Spending and investment are separate things. All above points from policy guidance clearly to me accept investment in form of unsecured director loan.


As long as you give unsecured loan to your company and then spend as much as you need from your business account to keep your business alive and for its expansion, you are done. There is no limit/requirement on how much to spend. So investing by way unsecured director loan, running a business, creating jobs and meeting UKBA rules, I am sure you will get extension.


One final thing for now is that see what HO is awarding points for in attributes for extension applications, is it investment or spending? It is investment.


Link for Tier 1 Entrepreneur policy:


http://www.ukba.homeoffice.gov.uk/sitec ... dance1.pdf

Helpingperson

I read you all post i could not understand about this type of investment. We need a director loan agreement in this type of investment as well ?

Please explain me how its work ?

Direct cash investment
In order to ensure that the money is used by the business, you should provide the accounts of that business for assessment. These accounts must show the investment in money made directly by you, in your own name.

Thanks

hnav wrote:Helpingperson

I read you all post i could not understand about this type of investment. We need a director loan agreement in this type of investment as well ?

Please explain me how its work ?

Direct cash investment
In order to ensure that the money is used by the business, you should provide the accounts of that business for assessment. These accounts must show the investment in money made directly by you, in your own name.

Thanks

say for example u r transferring 20000 from yr personal account to business acc(ltd com acc), then u must make a loan agreement with the company in presence of other directors by keeping a munite( a deed among all the directors regarding the loan agreement and signed by all). so that will be yr director's loan account. to reflect director's loan account u have to prepare a management account preferably by a chartered accountant( according to policy guidance) where in the balance sheet 20000 pounds will be shown as a loan by yr name. thats all

Tanvir1985

Ok. If company have sole director and sole shareholder. I means to say only one person who is company director, share holder, investor and owner of the company. That only person who run the company. All the investment his own investment and he invest through company bank accounts

In this case that sole director transfer from personal account to company account and invest in business.

We still need director loan agreement ?

Thanks

It does not matter how many directors are there, you need loan agreement between you and your company. Company is separate entity.

hnav wrote:Tanvir1985

Ok. If company have sole director and sole shareholder. I means to say only one person who is company director, share holder, investor and owner of the company. That only person who run the company. All the investment his own investment and he invest through company bank accounts

In this case that sole director transfer from personal account to company account and invest in business.

We still need director loan agreement ?

Thanks

helping person already answered this question. yes still u need to keep a minute and make a loan agreement

Any idea about this type of investment in business its in policy guidance

Direct cash investment
In order to ensure that the money is used by the business, you should provide the accounts of that business for assessment. These accounts must show the investment in money made directly by you, in your own name


Thanks

hnav wrote:Any idea about this type of investment in business its in policy guidance

Direct cash investment
In order to ensure that the money is used by the business, you should provide the accounts of that business for assessment. These accounts must show the investment in money made directly by you, in your own name


Thanks

this is a confusion for me as well. as per my understanding its talking about cash deposit in the business account and then investment made from that account. i would say everybody should avoid this complexity and should transfer money from personal ac to business ac. but if money has already been invested in this way then follow the same procedure i.e. keep a minute and create a director loan and mention in that agreement that loan is given by cash to business. but then source of the money should be shown as well as per my understanding

Tanvir1985

The meaning of that type of investment come in my mind

It could be like that money invested directly by applicant from his personal account or company accout with out any loan agreement. Applicant will show source of money will be invested by business and all been invested his own name.

What you saying you are right as well it must be loan agreement if money lend to company.

If i think another side that director who is only shareholder, invester of the company does not want lend money to company. Whatever he invest thats his own investment in his own name.

Is it make sense, plz correct me if i am wrong

Thanks

as i said there must be an agreement as per the policy. and for cash investment I'm unable to advise u as I'm confused about the meaning of that

Tanver1985

If you see policy guidance page 41

They saod there is no Objection

There is no objection, however, to you investing in companies that are mainly involved in construction.
Money should be fully used in the business and not held in the business bank account in order to qualify for the award of points
Money deposited in a bank account, even if it is in a United Kingdom business bank account, is not counted as investment in business. The money should be used in the business to encourage growth or expansion, to improve services or products and to ensure the business is profitable.

Can anybody explain me second point of investment how its work
In this case also required director's loan agreement as well ?
ii) Unaudited accounts and an accountant’s certificate of confirmation

Money that has been invested in business
103. You should use this for initial applications under sections a; b; c and d (see the attributes
table for initial applicants) or for section A of your extension application if applicable. Evidence to show how much has been invested
104. You must provide all the appropriate specified documents needed to establish the amount you have already invested from the following list.
i) Audited accounts
Registered companies that are required to produce audited accounts must do so. For information on who needs to produce these accounts please refer to the Companies House website on http://www.companieshouse.gov.uk/about/ ... gba3.shtml.
ii) Unaudited accounts and an accountant’s certificate of confirmation
Businesses that are not required to produce audited accounts must provide unaudited accounts, sometimes called management accounts, together with a certificate of confirmation from a suitably regulated accountant (see below).
Audited or unaudited accounts must clearly show the investment in money made directly by you, in your own name, or on your behalf and showing your name. You should indicate where this
is shown on your evidence. If you have invested by way of share capital the business accounts must show the shareholders, the amount and value of the shares (on the date of purchase) in your name as it appears on your application. If the value of your share capital is not shown in the accounts, then share certificates should be submitted in addition to the accounts as documentary evidence.
The accounts should clearly show the name of the accountant and the date the accounts
were produced. The accountant must be a member of a recognised UK supervisory body (see glossary); if not, we will not accept this evidence. The accounts must show how much you have invested in the business.
iii) Director’s loan
If you have made the investment in the form of a director’s loan, it must be shown in the relevant set of accounts provided, and you must also provide a legal agreement, between you (in the name that appears on the application) and the company.
This agreement should show:
• the terms of the loan;
• any interest that is payable;
• the period of the loan; and
• that the loan is unsecured and subordinated in favour of third-party creditors.
If it is not clear from the information provided that the loan is unsecured and subordinated in favour of third-party creditors, we will not accept the loan for the award of points.

hnav wrote:Can anybody explain me second point of investment how its work
In this case also required director's loan agreement as well ?
ii) Unaudited accounts and an accountant’s certificate of confirmation

Money that has been invested in business
103. You should use this for initial applications under sections a; b; c and d (see the attributes
table for initial applicants) or for section A of your extension application if applicable. Evidence to show how much has been invested
104. You must provide all the appropriate specified documents needed to establish the amount you have already invested from the following list.
i) Audited accounts
Registered companies that are required to produce audited accounts must do so. For information on who needs to produce these accounts please refer to the Companies House website on http://www.companieshouse.gov.uk/about/ ... gba3.shtml.
ii) Unaudited accounts and an accountant’s certificate of confirmation
Businesses that are not required to produce audited accounts must provide unaudited accounts, sometimes called management accounts, together with a certificate of confirmation from a suitably regulated accountant (see below).
Audited or unaudited accounts must clearly show the investment in money made directly by you, in your own name, or on your behalf and showing your name. You should indicate where this
is shown on your evidence. If you have invested by way of share capital the business accounts must show the shareholders, the amount and value of the shares (on the date of purchase) in your name as it appears on your application. If the value of your share capital is not shown in the accounts, then share certificates should be submitted in addition to the accounts as documentary evidence.
The accounts should clearly show the name of the accountant and the date the accounts
were produced. The accountant must be a member of a recognised UK supervisory body (see glossary); if not, we will not accept this evidence. The accounts must show how much you have invested in the business.
iii) Director’s loan
If you have made the investment in the form of a director’s loan, it must be shown in the relevant set of accounts provided, and you must also provide a legal agreement, between you (in the name that appears on the application) and the company.
This agreement should show:
• the terms of the loan;
• any interest that is payable;
• the period of the loan; and
• that the loan is unsecured and subordinated in favour of third-party creditors.
If it is not clear from the information provided that the loan is unsecured and subordinated in favour of third-party creditors, we will not accept the loan for the award of points.

its a very simple thing. any kind of investment in the company in yr name must need a loan agreement as i told u before. unaudited account means a management account which is pretty much profit & loss account and balance sheet prepared by a chartered account where yr loan will be shown. thats it

Tanvir 1985

You are right according to accounting point of view, it should be loan agreement. In other hand if you see in policy guidance it does not say clearly in first two types of investments ( direct cash and share capital ) to made loan agreement. It just saying accounts clearly shown and accountant certificate to confirm that investment made by applicant in his name or behalf his name.

Thats means policy guidance make confuse

hnav wrote:Tanvir 1985

You are right according to accounting point of view, it should be loan agreement. In other hand if you see in policy guidance it does not say clearly in first two types of investments ( direct cash and share capital ) to made loan agreement. It just saying accounts clearly shown and accountant certificate to confirm that investment made by applicant in his name or behalf his name.

Thats means policy guidance make confuse

i believe direct cash is intended for self employment and share capital means when u buy share in a company which in most cases we don't coz almost all the applicants are forming their own company therefore no reason of buying shares.

Tanvir 1985

I could not get your answer please explain what direct cash and share capital ?

hnav wrote:Tanvir 1985

I could not get your answer please explain what direct cash and share capital ?

i already answered this. investment by share means u buy share in a company and that must show in a share transfer certificate. direct cash probably means investment in self employment( but i am not sure)

tanvir1985th wrote:

hnav wrote:Tanvir 1985

You are right according to accounting point of view, it should be loan agreement. In other hand if you see in policy guidance it does not say clearly in first two types of investments ( direct cash and share capital ) to made loan agreement. It just saying accounts clearly shown and accountant certificate to confirm that investment made by applicant in his name or behalf his name.

Thats means policy guidance make confuse

i believe direct cash is intended for self employment and share capital means when u buy share in a company which in most cases we don't coz almost all the applicants are forming their own company therefore no reason of buying shares.

Tanvir

I hv been refused my extension application (200k cat), need urgent reply as I need to appeal & time is short.

My case is:
I am a self employed with a sole trading concern and separate business bank account. I transferred my investment funds fm my personal bank a/c. to business bank a/c. and carried out business activities fm tht a/c.
I managed to secure all the points except tht according to HO, I did not provide enough evidence to prove investment in money has been made.

Evidence Submitted;
-unaudited accounts
-accountant certificate of confirmation (that was a routine certificate usually accompanied by the financial statements issued by accountants confirming such as "In accordance with instructions given to us we have prepared and approved without carrying out an audit the annexed financial statements (Profit & Loss account and Balance sheet) from the accounting records of Mr. ABC T/A XYZ Consultants and from information and explanations supplied to us by him"........the certificate was not a confirmation certificate for investment made.

Grounds of Refusal:
-the unaudited accounts & accountant's certificate of confirmation do not clearly show that investment made directly by you in your own name,
-You hv not provided Director's loan agreeement or any share certificates

How can somebody running a sole trading concern provide Director's loan agreement or share certificates.
I do not understand what type of evidence exactly are they looking for.
I can further provide:
-A certificate fm my certified accountant confirming that eg 200k amount of investment in money has been made by his client.
-Purchase & Sale invoices, evidence of shipments (B/Lading) & VAT returns.

I do not know whether they r enough or not as I do not hv any other document to prove.

In my view, HO is confused with rgd to the requirement of documents for self employed applicants as even the policy guideline is not very clear since mostly applicants prefer a company rather than sole trading entity. So the ppellant ultimately may hv to explain the judge during hearing.

Pl anybody guide me , wud be extremely thnkful.

Hi

Did you show investment by transferring funds of £200K from personal account to business account?


Or Did you actually spend whole £200k and that you showed as your investment?

Please some information on how you did investment.

helpingperson wrote:Hi

Did you show investment by transferring funds of £200K from personal account to business account?


Or Did you actually spend whole £200k and that you showed as your investment?

Please some information on how you did investment.

Thnx for yr reply.

Yes I submitted both bank statements, personal + business, along with table in excell sheet showing all transactions.
Yes i invested all the funds. I am a trading concern, buy goods and export, mostly funds are occupied in the shape of creditors & debtors. Funds spent on purchasing stocks, business assets such as car, office equipments, furniture etc & expenditures such as salary, bills etc. I am working fm home so there is no office premises.

shanybaba1974 wrote:

helpingperson wrote:Hi

Did you show investment by transferring funds of £200K from personal account to business account?


Or Did you actually spend whole £200k and that you showed as your investment?

Please some information on how you did investment.

Thnx for yr reply.

Yes I submitted both bank statements, personal + business, along with table in excell sheet showing all transactions.
Yes i invested all the funds. I am a trading concern, buy goods and export, mostly funds are occupied in the shape of creditors & debtors. Funds spent on purchasing stocks, business assets such as car, office equipments, furniture etc & expenditures such as salary, bills etc. I am working fm home so there is no office premises.

Can you please give me your contact number? Thanks

shanybaba1974 wrote:

tanvir1985th wrote:

hnav wrote:Tanvir 1985

You are right according to accounting point of view, it should be loan agreement. In other hand if you see in policy guidance it does not say clearly in first two types of investments ( direct cash and share capital ) to made loan agreement. It just saying accounts clearly shown and accountant certificate to confirm that investment made by applicant in his name or behalf his name.

Thats means policy guidance make confuse

i believe direct cash is intended for self employment and share capital means when u buy share in a company which in most cases we don't coz almost all the applicants are forming their own company therefore no reason of buying shares.

Tanvir

I hv been refused my extension application (200k cat), need urgent reply as I need to appeal & time is short.

My case is:
I am a self employed with a sole trading concern and separate business bank account. I transferred my investment funds fm my personal bank a/c. to business bank a/c. and carried out business activities fm tht a/c.
I managed to secure all the points except tht according to HO, I did not provide enough evidence to prove investment in money has been made.

Evidence Submitted;
-unaudited accounts
-accountant certificate of confirmation (that was a routine certificate usually accompanied by the financial statements issued by accountants confirming such as "In accordance with instructions given to us we have prepared and approved without carrying out an audit the annexed financial statements (Profit & Loss account and Balance sheet) from the accounting records of Mr. ABC T/A XYZ Consultants and from information and explanations supplied to us by him"........the certificate was not a confirmation certificate for investment made.

Grounds of Refusal:
-the unaudited accounts & accountant's certificate of confirmation do not clearly show that investment made directly by you in your own name,
-You hv not provided Director's loan agreeement or any share certificates

How can somebody running a sole trading concern provide Director's loan agreement or share certificates.
.

Just to confirm whether your unaudited financial statements also included the cash flow statement?

@MTZ510

No, it did not include any cash flow statement. However it did include bank statements, both personal & business along with a table showing date-wise transactions of investment made fm personal to business.

I am also confused about how one can prove that 200K was invested/used in the business and had posted the same question on this forum few months back, but i am afraid there aren't any members on this forum who have gone through extension experience and hence no first hand information is available.

I believe you can prove your point at appeal stage, so best of luck for your appeal.
You can add cashflow statements to your unaudited accounts of last 3 years which will show the investment made by you in the business. Just another document to establish your point.

Do keep posted about the outcome of you appeal, it will be beneficial for lot of people on this forum..

Thanks

shanybaba1974 wrote:@MTZ510

No, it did not include any cash flow statement. However it did include bank statements, both personal & business along with a table showing date-wise transactions of investment made fm personal to business.

@shanybaba1974

You had posted on other thread that you got the extension and now you are saying that you got refused, i am confused ........

http://www.immigrationboards.com/uk-tie ... ml#p999156

shanybaba1974 wrote:Hello,

I am main applicant of Tier 1 Entrepreneur (200k catagory) and have already got visa extension for further 2 years. Soon my dependents visa is also expiring and will have to apply for their visa extension. Can anybody guide me what is usually the processing time for visa extension of dependents in my category. Any ideas or experiences please!!!!