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A company has issued shares to external investors under the enterprise investment scheme (EIS), but loans from directors have been repaid
A manufacturing company has two divisions. One has operated successfully for some years and is self-financing. Two years ago a second division with a new product line commenced to trade. There have been teething problems but the directors are confident that it is viable and has a profitable future.
At the October 2011 year end there were loans outstanding to three current directors totalling £500 000 and a £50 000 loan from a previous director and shareholder.
In January 2012 two of the directors capitalised their loan accounts totalling £450 000 for shares. The third current director initially retained his £50 000 loan account.
In February 2012 the company issued new shares to external investors for £500 000 on which enterprise investment scheme (EIS) relief has been claimed. In March 2012 the two remaining loans of £50 000 from the third current...
