Loans to the Company by a Director

[michaelfairburn]

I am in the process of setting up a Ltd company with 2 other people. We all want to be co-directors, but the other 2 cannot afford to put up a third of the money needed. I am prepared to put up the shortfall and would value advice on how best to do this so that I don't lose out on the interest I could be making on my money. Many thanks in advance.

[jpcentral]

Maybe you are confusing directors and shareholders. You can be a director without being a shareholder so you could all be directors without having equal shareholdings.

However, if you all want equal shareholdings, the simplest way is probably for you to lend the money to the others to purchase the shares, backed up by a properly drawn up agreement and (if possible) secured by a charge on their houses or by a charge on the shares of the company. Interest should be payable, which should be declared as income.

The above answer is based on incomplete information and proper professional advice should be taken before acting on the above.

John Perry
Central Business Services
Loughborough