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Director's Loan or Share Capital??

Only for UK Tier 1 (Entrepreneur) points system

Moderators: Casa, JAJ, ca.funke, Amber, Zimba, vinny, Obie, EUsmileWEallsmile, batleykhan, geriatrix, John, ChetanOjha, archigabe, push

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skg2017
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Director's Loan or Share Capital??

Post by skg2017 » Fri Feb 03, 2017 12:09 pm

Dear Zimba and other Gurus,

My extension is due in 3 weeks. So far my plan was to show director's loan, but my solicitor is suggesting to make it share capital. His concern is showing share capital is less hassle as it does not require to provide all the 3 years bank statements and does not need any agreement, so there will be less chance to find clue for refusal. But my accountant is telling it is not logical to issue share capital at the end 3rd year. He is in favour of directors loan

I am quite confused how to proceed?

Please suggest me what are pros and cons for both the systems?

Thank you in advance for logical reply.

cappachino
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Re: Director's Loan or Share Capital??

Post by cappachino » Fri Feb 03, 2017 12:21 pm

skg2017 wrote:Dear Zimba and other Gurus,

My extension is due in 3 weeks. So far my plan was to show director's loan, but my solicitor is suggesting to make it share capital. His concern is showing share capital is less hassle as it does not require to provide all the 3 years bank statements and does not need any agreement, so there will be less chance to find clue for refusal. But my accountant is telling it is not logical to issue share capital at the end 3rd year. He is in favour of directors loan

I am quite confused how to proceed?

Please suggest me what are pros and cons for both the systems?

Thank you in advance for logical reply.
Director Loan seems straight forward.
You don't need to provide three year bank account just the transaction when the money was transfered.

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Zimba
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Re: Director's Loan or Share Capital??

Post by Zimba » Fri Feb 03, 2017 1:23 pm

Director's loan is the most common form of investing your business, it makes no sense to buy the shares of your own company when you are the only shareholder !
There is NO requirement to send three year bank statements :!:
Advice is given based on my personal research and experience only. Do NOT contact me via private message for immigration advice

skg2017
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Re: Director's Loan or Share Capital??

Post by skg2017 » Fri Feb 03, 2017 5:42 pm

Hi zimba88,

Thank for your reply. What do you wanted to mean by money must be traceable? My Business bank statement shows our personal full name for directors' loan amount transfer. But Some money were transferred from our joint account and in the business bank statement it shows only our surnames (Mr. surname and surname).

As I said before, the money were transferred from 3 different sources (my personal account, my partner's personal account and our joint account). The reference of the transfers were also different and mix. i.e. Director/Business/Investment etc.

Please suggest me do I need to provide only the business bank statement or I need to submit all other statement to link the transfer?

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Zimba
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Re: Director's Loan or Share Capital??

Post by Zimba » Fri Feb 03, 2017 7:08 pm

Please submit ALL business bank statements and ALL personal/joint bank statements showing money came from YOU
Advice is given based on my personal research and experience only. Do NOT contact me via private message for immigration advice

skg2017
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Re: Director's Loan or Share Capital??

Post by skg2017 » Fri Feb 03, 2017 11:21 pm

Dear Zimba88,

Thank you very much for the prompt reply.

If I go for the share capital option, do I still need to submit the business bank statements? My solicitor saying, in share capital we do not need to send bank statement unless HO ask.

Solicitor is in favour of share capital in order to avoid the DO loan hassle and bank statements because he thinks case worker might get more question from business bank statement in each transaction. In my last 2 years submitted accounts it was showing '' Creditor: amounts falling due within one year'' format. The 3rd years account is yet to submit. If I go for share capital, I think in the 3rd year it will show as share capital value instead of ''Creditor: amounts falling due within one year, Directors' name xxx loan---- £55K''.

Dont you think re-valuating this sudden share price would be a question? Solicitor's saying is, instead of keeping loan to the company, you bought the share from company.

Do you think will there be any question for genuinity in this case?

What do you suggest?

Thank you zimba88 for supporting us.

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Zimba
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Re: Director's Loan or Share Capital??

Post by Zimba » Fri Feb 03, 2017 11:49 pm

Do you think will there be any question for genuinity in this case?
This has nothing to do with genuineness of your business. It is up to you on which approach to take as both require specific documents.
Both options requires careful preparation of the accounts with ALL the information HO requires. The DL requires more evidence (DL + business bank accounts) but it is usually the preferred choice for directors as the money can be transferred back easily. In share option you might incur costs and taxes as you have to technically sell those shares to get your money back.
Advice is given based on my personal research and experience only. Do NOT contact me via private message for immigration advice

skg2017
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Re: Director's Loan or Share Capital??

Post by skg2017 » Sat Feb 04, 2017 12:17 am

Thank you zimba88.

Is it necessary to provide business bank statement for share capital?

Could you please give a document checklist for share capital part only?

Thanks

Hassan Rasheed
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Re: Director's Loan or Share Capital??

Post by Hassan Rasheed » Tue Feb 07, 2017 12:43 am

I endorsed your accountant and zimba go with director loan. Plz don't just only depend on your solicitor point of view. share capital i think bit more complicated as zombie explain you already.

I am suffering on investment point an get refusal. I would suggest go with Director loan option without any hesitation.Its more simple an common way.

HN

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Zimba
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Re: Director's Loan or Share Capital??

Post by Zimba » Tue Feb 07, 2017 12:46 am

Is it necessary to provide business bank statement for share capital?
No
Could you please give a document checklist for share capital part only?
Just follow the guide please
Advice is given based on my personal research and experience only. Do NOT contact me via private message for immigration advice

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