The loan must be reported within the accounts lodged with companies house along with a company report from the directors which should also include a note of the loan .It would be highly unlikely that any action would ever be taken about a sole director not minuting or losing the minutes of a resolution in this senerio as the loan has been recorded .
Its also to be expected that if a sole director was asked for a copy of the resolution under threat of prosecution he/she would write one out there and then .
Common sense in situations needs to prevail , if there has been no attempt to defraud or hide the loan then it really would be pointless to prosecute
These things usually happen when the company goes bust and the official receiver takes action on behalf of the company to recover money for the creditors.
Whilst it would certainly be necessary to report the loan in the accounts, that is not enough. The resolution authorising the loan should, AIUI, be lodged with CoHo separately from the accounts.
Yes i agree however if a company goes bust then the director would as one of those owing the company money be chased for repayment of the loan , wether he/she is in a position to repay it would be another issue .
Generally though in sole director companies its the other way round where the director poors his her / own money into the business in an attempt to keep it afloat or has garenteed the overdrafts personally
Whilst the 1985 Act makes it a criminal offence to loan at all (beyond £5k), it's not obvious from a quick look at the text of the 2006 Act whether it would be *criminal* to loan without a proper resolution.
If not, it becomes a purely civil matter, and so it would indeed be unlikely for any action to be taken *when everything is hunky-dory*.
But if the company goes bust and the sole director is unable to repay the loan immediately (or enough of it to pay off all the creditors), then you can bet your boots that the creditors will leave no stone unturned to get their dosh back, and that includes picking up on issues which in other circumstances common sense would dismiss as mere technicalities.
He could, but it would be fraudulent to do so, and if it could be shown (this could be difficult, admittedly, but is not necessarily impossible, and if the amounts are serious enough to warrant spending effort on it, then effort will be spent) that you had fabricated the evidence after the fact, you'd be for the slammer.
As I said, I'm not sure whether it's still an offence under the new act, so the CPS may be an irrelevance, since it would just be a civil matter.
But you are mistaken if you think it's not in the public interest. By failing to report the resolution as required, you are giving insufficient information to CoHo, and therefore you could be seen to be deliberately trying to avoid drawing attention (of any member of the public who wants to check you out at CoHo before deciding whether to do business with you) to a potentially embarrassing and offputting fact about your company.
By recording the loan in company accounts and noting it in the directors report it would be freely available to any investers , customers or future suppliers who wish to deal with the company.
There is no requirement to show anyone company resolutions other than the shareholders
Make up your mind. You wrote that the resolutions *should* be included in the DR, now you're saying they need not be. Which is it?
If there is any possibility that a resolution of the type we are dicussing could be deemed to be a special resolution, then s30 requires that it be notified within 15 days. Since s283 defines a special resolution as any passed by a majority of 75% or more, and since any resolution passed by a one-member company ipso facto has a 100% majority, there's a good chance that *every* formal resolution of a one-man company must be notified. :-)
It would be interesting if Steve typed up a set of minutes, back dated them a few years and feel very smug only for tests to be done on the paper that showed it had only been manufactured in the last few months!
All accounts filed with the tax office and companies house should have a directors report attached , it never used to be enforced wit small companies by the tax office however it is now
As most documentation now is kept electronically it wouldnt prove anything other than the recipient has a copy of the 'original'
Only if they are completely stupid
I have a hard copy of my articles and an electronic copy , same goes for my company accounts , directors reports and any other official paperwork .
I will supply anyone a copy of this on request (as long as they are legally entitled)
Every year i use the same directors report format as i do with all the other documents , just modify as required .
It would be totally pointless testing the paper or even viewing the file creation dates .
If you bother to read the companys act 2006 you will see that it may be prudent but is not required to put resolutions into written form (private companies not public)
All accounts filed with the inland revenue must have a Directors report Any directors loans must be identified
Both the inland revenue and companies house require a statement how the accounts were made up and if you are claiming exemption from filing audited accounts This forms part of the directors report
Without this they will just bounce your accounts straight back at you .
Why mention s109? The one most relevant to loans is s197.
s214 says you can make the resolution after the event, but only if done "within a reasonable period". It doesn't define what that is, but I'd guess a few weeks would be OK, a few months doubtful, a few years definitely not OK.
Notes 400 and 409 are irrelevant, you must mean 404 to 408.
n407 simply confirms that there is an exemption for small amounts. n408 confirms that breach is no longer criminal.
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