Director Loan Investment

[hsbits]

Dear All Members,

Need your advice on this important issue.

WE (Ent team) applied initial application in 2014 and received BRP in 2015.
We showed investment in joint bank account from overseas. Our file was in process and we thought to bring investment in OUR COMPANY ACCOUNT. We authorized 3rd person to take amount from our joint account and send in our company account as he had GBP currency account with his name. In fact, he transferred ours 50K funds from his personal (GBP Currency)account to our company account. That all was done due to our negligence.
We discussed with our solicitor and accountant and they said we have to do again 50k investment from our personal/joint account in the form of director loan. We already did 20k investment from our UK personal accounts to company accounts ( from march 2017-till today) and remaining will do till end of the year. Our extension is due in April 2018.

Please note, our accountant has already mentioned director loan investment in 2014 & 2015 accounts and 2016 account we have not submitted yet.

Please advice.
1. how 2014 & 2015 accounts can be fixed and how to justify investment or funds transferred from 3rd person account to our company account?
2. If we do 50k investment from our personal/joint account in 2017 year, is there any issue ?
3. One of the accountant told us, we do not need to re-invest. We can covert accounts from DL to capital share by pass a resolution. Is it possible?

Kindly share your value-able thoughts .

[zimba]

1. how 2014 & 2015 accounts can be fixed and how to justify investment or funds transferred from 3rd person account to our company account?

Fix what ?? The transfer is not relevant to accounts

2. If we do 50k investment from our personal/joint account in 2017 year, is there any issue ?

No

3. One of the accountant told us, we do not need to re-invest. We can covert accounts from DL to capital share by pass a resolution. Is it possible?

You can as long as your accounts show exactly what home office requires as per guide

[marcnath]

1. how 2014 & 2015 accounts can be fixed and how to justify investment or funds transferred from 3rd person account to our company account?

What does the BUSINESS bank account statement show ? Does it have either of your names against the transfer transaction ? If so, that meets the requirements specified by HO.

2. If we do 50k investment from our personal/joint account in 2017 year, is there any issue ?

No, and it is not an issue even if you do it in 2018.

3. One of the accountant told us, we do not need to re-invest. We can covert accounts from DL to capital share by pass a resolution. Is it possible?

Kindly share your value-able thoughts .

Yes, the accountant is correct. Doing that also removes the need to produce the bank account evidence

[hsbits]

Dear Zimba,
Many thanks for your reply and views. when our funds were transferred from 3rd person in our company bank account in 2014 that time accountant mentioned in our submitted annual accounts that 50K as been invested. But now in 2017, we are doing investment from our personal accounts. my query is what should we say about that 50K that was transfer from 3rd person in our company bank account?

[hsbits]

1. how 2014 & 2015 accounts can be fixed and how to justify investment or funds transferred from 3rd person account to our company account?

What does the BUSINESS bank account statement show ? Does it have either of your names against the transfer transaction ? If so, that meets the requirements specified by HO.
Dear Marcnath,
business bank account statement shows 3rd person name to whom we authorized. It does not show our names.

2. If we do 50k investment from our personal/joint account in 2017 year, is there any issue ?

No, and it is not an issue even if you do it in 2018.

3. One of the accountant told us, we do not need to re-invest. We can covert accounts from DL to capital share by pass a resolution. Is it possible?

Kindly share your value-able thoughts .

Yes, the accountant is correct. Doing that also removes the need to produce the bank account evidence

marcnath, Many thanks for your opinion,
If we pass resolution, can we change our submitted accounts from Director loan to share capital?

2ndly, like I mentioned above, we have already did 20K investment in the form of director loan during the last 4 months.
What you recommend, should we adopt Director loan route or go through share capital ?
thanks

[zimba]

Dear Zimba,
Many thanks for your reply and views. when our funds were transferred from 3rd person in our company bank account in 2014 that time accountant mentioned in our submitted annual accounts that 50K as been invested. But now in 2017, we are doing investment from our personal accounts. my query is what should we say about that 50K that was transfer from 3rd person in our company bank account?

Nothing. AGAIN, the fact that money is transferred by someone else has nothing to do with accounts preparation. It changes nothing in there

[marcnath]

marcnath, Many thanks for your opinion,
If we pass resolution, can we change our submitted accounts from Director loan to share capital?

If your question is can you record 50k invested as Director loan initially to 50K share capital without actually transferring any money/cash - the answer is yes.

Is it passing one resolution, two resolutions or even no resolutions, your accountant would be better at advising you.

UKVI/HO does not need those resolutions, if any. It is your accountant who will need them before they can certify the account.

2ndly, like I mentioned above, we have already did 20K investment in the form of director loan during the last 4 months.
What you recommend, should we adopt Director loan route or go through share capital ?
thanks

It does not matter which method you use - UKVI does not seem to care. But the evidence needed is different.

[hsbits]

Dear Zimba,
Many thanks for your reply and views. when our funds were transferred from 3rd person in our company bank account in 2014 that time accountant mentioned in our submitted annual accounts that 50K as been invested. But now in 2017, we are doing investment from our personal accounts. my query is what should we say about that 50K that was transfer from 3rd person in our company bank account?

Nothing. AGAIN, the fact that money is transferred by someone else has nothing to do with accounts preparation. It changes nothing in there

Dear Zimba,

Thank you for your guidance.

[hsbits]

marcnath, Many thanks for your opinion,
If we pass resolution, can we change our submitted accounts from Director loan to share capital?

If your question is can you record 50k invested as Director loan initially to 50K share capital without actually transferring any money/cash - the answer is yes.

Is it passing one resolution, two resolutions or even no resolutions, your accountant would be better at advising you.

UKVI/HO does not need those resolutions, if any. It is your accountant who will need them before they can certify the account.

2ndly, like I mentioned above, we have already did 20K investment in the form of director loan during the last 4 months.
What you recommend, should we adopt Director loan route or go through share capital ?
thanks

It does not matter which method you use - UKVI does not seem to care. But the evidence needed is different.

Dear marcnath,
many thanks for your suggestions. I ll again get some guidance from you near extension.

[hsbits]

Dear marcnath, Zimba and other members,

Please advice.
Like I mentioned previously, our funds were transferred by 3rd person in 2014 to our company account that do not meet the requirements of investment.
50K which was transferred to our company account, what name should we give to those funds for financial accounts? in 2014 & 2015 annual account, our accountant mentioned as £50k creditors amount etc.

How should we justify in our annual accounts who money is that? should we declare it 3rd party funds or 3rd party loan and what exactly we need to mention in financial annual accounts? do we need any agreements for that etc?

Current year, We are doing £50k investment from our joint account to business account. But worried about first £50K transfer.

Please advice accordingly.

[zimba]

Money transferred from someone else to your account will NOT qualify for investment under director's loan UNDER IMMIGRATION RULES as it fails to satisfy the 2nd requirement in the rules.
In your company accounts money transferred by a 3rd person could well be under your name as Director's loan HOWEVER this money will not be accepted under Tier 1E rules for the award of the points, even though from an accounting perspective could be considered Director's Loan.

An EXTRA immigration rules requirement demands you to prove that any money claimed as DL was in fact transferred by YOU as a DIRECTOR. This is IN ADDITION to what it is in your company accounts.

[hsbits]

Money transferred from someone else to your account will NOT qualify for investment under director's loan UNDER IMMIGRATION RULES as it fails to satisfy the 2nd requirement in the rules.
In your company accounts money transferred by a 3rd person could well be under your name as Director's loan HOWEVER this money will not be accepted under Tier 1E rules for the award of the points, even though from an accounting perspective could be considered Director's Loan.

An EXTRA immigration rules requirement demands you to prove that any money claimed as DL was in fact transferred by YOU as a DIRECTOR. This is IN ADDITION to what it is in your company accounts.

Dear Zimba,
thank you for your response.
to prove that any money claimed as DL was in fact transferred by YOU as a DIRECTOR: to meet this requirements we are doing 50K in 2017 from our joint account to business account.

Please advice, once we ll prepare DL agreement, should be made it for 50K only which we r doing in 2017 and do not required any other agreement for 3rd party tranfer?

[zimba]

3rd party agreement is not required at all for extension

[marcnath]

Dear marcnath, Zimba and other members,

Please advice.
Like I mentioned previously, our funds were transferred by 3rd person in 2014 to our company account that do not meet the requirements of investment.
50K which was transferred to our company account, what name should we give to those funds for financial accounts? in 2014 & 2015 annual account, our accountant mentioned as £50k creditors amount etc.

How should we justify in our annual accounts who money is that? should we declare it 3rd party funds or 3rd party loan and what exactly we need to mention in financial annual accounts? do we need any agreements for that etc?

Current year, We are doing £50k investment from our joint account to business account. But worried about first £50K transfer.

Please advice accordingly.

Take your accountant's advice on how to handle the recording of the transactions of amount from the 3rd party - it is an accounting matter and has no implication to your extension application.

[hsbits]

Dear marcnath, Zimba and other members,

Please advice.
Like I mentioned previously, our funds were transferred by 3rd person in 2014 to our company account that do not meet the requirements of investment.
50K which was transferred to our company account, what name should we give to those funds for financial accounts? in 2014 & 2015 annual account, our accountant mentioned as £50k creditors amount etc.

How should we justify in our annual accounts who money is that? should we declare it 3rd party funds or 3rd party loan and what exactly we need to mention in financial annual accounts? do we need any agreements for that etc?

Current year, We are doing £50k investment from our joint account to business account. But worried about first £50K transfer.

Please advice accordingly.

Take your accountant's advice on how to handle the recording of the transactions of amount from the 3rd party - it is an accounting matter and has no implication to your extension application.

Dear marcnath and zimba,

Please advice.
I talked with accountant and he said first 3 years account were prepared with director loan.its not mentioned 3rd party name.
he simply saying do 50K investment in 2017 and make DL agreement for this year and submit only 2017 year account with DL agreement.

Please advice, if we do investment in 2017 and took salaries as a director, will this investment be calculated only for current year or it will be linked since company was open?

[marcnath]

Dear marcnath and zimba,

Please advice.
I talked with accountant and he said first 3 years account were prepared with director loan.its not mentioned 3rd party name.
he simply saying do 50K investment in 2017 and make DL agreement for this year and submit only 2017 year account with DL agreement.

Please advice, if we do investment in 2017 and took salaries as a director, will this investment be calculated only for current year or it will be linked since company was open?

As long as you satisfy these two conditions over the three years, you should be ok.

Investment >=50K
Investment + revenue - salaries >=50K

[hsbits]

Dear marcnath and zimba,

Please advice.
I talked with accountant and he said first 3 years account were prepared with director loan.its not mentioned 3rd party name.
he simply saying do 50K investment in 2017 and make DL agreement for this year and submit only 2017 year account with DL agreement.

Please advice, if we do investment in 2017 and took salaries as a director, will this investment be calculated only for current year or it will be linked since company was open?

As long as you satisfy these two conditions over the three years, you should be ok.

Investment >=50K
Investment + revenue - salaries >=50K

Dear Marcnath,

Salaries means only directors salaries? not employees ones

[marcnath]

Dear Marcnath,

Salaries means only directors salaries? not employees ones

Yes - just the salaries of the entrepreneur(s) - both of yours as you are a team

[hsbits]

Dear Marcnath,

Salaries means only directors salaries? not employees ones

Yes - just the salaries of the entrepreneur(s) - both of yours as you are a team

Thank you.

[hsbits]

3rd party agreement is not required at all for extension

Dear Zimba,

I got all my answers so far. Thanks to You and Marcnath.

Please advice.

for DL transfer of money from personal/Joint to business is an evidence of investments.
for share capital, what is the evidence for investments?
is the value of share and no. of shares will be considered as an evidence of investments?
for 2016 year accounts, we have not submitted yet. Reason for delay is to switch from DL to share capital.
what exact notes or statement account should mentioned for share capital for 2016 & 2017 accounts?
if in case we submit 2016 accounts with DL and can we change to share capital in last years account 2017?
Please notes, the purpose of conversion from DL to share capital is only that we dont want to send bank statements.
waiting for your kind response

[zimba]

Please seek the help of your accountant.
Investment with share capital only requires company accounts showing the name of the share holders, number of shares allocated and value of each share.

[hsbits]

Please seek the help of your accountant.
Investment with share capital only requires company accounts showing the name of the share holders, number of shares allocated and value of each share.

thank all specailly Marcnath and Zimba. I got useful info.

Need advice please:

You know my history of investment. I spoke with accountant and finally we are moving to share capital.

1. Accountant said he can issue 2 shares and one share for each director and value of one share will be £25K. He will mention both directors name against this. Is that ok?

2. our current investment is 50K till today. If I want to increase investment ( to cover salaries etc), how can I do it? Should I transfer more from personal to business account? If yes, will the number of shares will increase for next years account?

[zimba]

It has now been repeated several times that you MUST read the official guide !!

1. Accountant said he can issue 2 shares and one share for each director and value of one share will be £25K. He will mention both directors name against this. Is that ok?

The guide says:

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 a printout of the company’s register of members from Companies House must be provided.

2. our current investment is 50K till today. If I want to increase investment ( to cover salaries etc), how can I do it? Should I transfer more from personal to business account? If yes, will the number of shares will increase for next years account?

It is up to you. This has nothing to do with immigration rules. Tier 1E rules do not dictate how to run or invest in any business. They simply tell you what they consider during the visa process as invested

[hsbits]

It has now been repeated several times that you MUST read the official guide !!

1. Accountant said he can issue 2 shares and one share for each director and value of one share will be £25K. He will mention both directors name against this. Is that ok?

The guide says:

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 a printout of the company’s register of members from Companies House must be provided.

2. our current investment is 50K till today. If I want to increase investment ( to cover salaries etc), how can I do it? Should I transfer more from personal to business account? If yes, will the number of shares will increase for next years account?

It is up to you. This has nothing to do with immigration rules. Tier 1E rules do not dictate how to run or invest in any business. They simply tell you what they consider during the visa process as invested

Thank you Zimba. Can you please explain these dates?
(date of purchase) - Should we put this date when investment was made or when we ll submit account with share capital method?
the date on which each person was registered as a member;

[zimba]

That is the date of share allocation (or purchase). It is obvious from the guide