hoskib

iTrader: (1)

or is it money loaned on a valuation of the company by, for example a bank?

company has 2 shareholders with different quantity of shares held, which adds up to the sum of the issued capital.

can anyone explain the jargon in dunce proof talk please as i've tried to get my head round it and i'm frazzled!

basically i want to find out if there is any money in the company or is it all worthless figures on paper.

ta

harvey

iTrader: (48)

I will try to explain but it is quite complex.
A sole trader is responsible for his debts just as a partnership is responsible for their debts so any liability incurred rests with the sole trader or partners and their debt follows them personally, hence their house and private assets are at risk.
A limited liability company is exactly that. Limited liability companies may be £100 companies, £10,000 companies, £100,000 companies, £1,000.000 companies etc.
These are private limited companies where the share holding is held by private individuals and cannot be traded publicly. There are normally restrictions on what can be done with share holdings as set out in the memorandum and articles of association. Public Liability Companies (PLCs) on the other hand have their shares traded on the Stock Market. Members of the public can buy and sell these shares.

A limited company has limited liability so for instance if a £100 company goes bust the liability is limited to the £100 share capital. Now there are issued shares ie. shares issued to a named person and these shares can be part paid or fully paid up.
As an example two guys might have one share each in a £100 company for which they paid £1 each and these would be £1 fully paid. The remaining 98 shares may be allocated equally to each of these guys but not paid up so if the company goes bust each of the two guys are liable for £49 each.
If the company goes bust the two guys cannot be pursued for more than the limit of their liability, unless negligence is proved and that is quite rare. Normal practice is to issue shares for say 1p each as a consideration until they are fully paid. These are known as part paid shares and the liability is for the balance.

So dealing with a £100 limited liability company you have little chance of getting your money when things go wrong. You have more possibility of recovering money from a sole trader or partnership providing they have funds or property. However, dealing with a £1,000,000.00 company where half a million shares are fully paid and the other half million are 1p part paid means the holders of the part paid shares could possibly be compelled to pay up the balance. In practice it would depend on the degree of insolvency and so forth.

This is an over simplified explanation as it is a complex topic.

harvey

iTrader: (48)

To find out if the company has any money or may have any money you can quite legally obtain a copy of their most recent filed accounts at Companies House. However, these accounts are likely to be out of date but you will be able to see the state of the company as at the last balance sheet date.
All limited companies have to file their accounts publicly, partners and sole traders do not have this obligation.

hoskib

iTrader: (1)

thank you very much harvey, well explained and i think i got most of it

if the 2 directors have shares issued to them does this mean they are paid up so they have invested/brought this money to the company?
is having a number of shares in one of their names proof of them giving said value to the company?

yes, got a full report from www.ukdata.com. shows the number of shares and director names and number of shares allocated to them. however, the company has no turnover,profit,assets. nothing other than an issued capital value.

any ideas why this would be? (PM me if you'd prefer)

many thanks

harvey

iTrader: (48)

The shares can be issued by not paid up so they have a liability for the balance. For instance, if one of them had 1000 shares of £1 each part paid, say 1p each then he has paid in to the company £10 and has a liability for £990.
Below a certain turn over limited liability companies can file abridged accounts but in the case you describe, the company may not have started trading at the time of the accounts or it may be a dormant company.
harveysmith1@btopenworld.com

Fat Boy

Even if issued and fully paid up, they can easily have pissed it away so you need to see the balancing entries on the balance sheet and, ideally, the cashflow. As someone said above, you can instantly, online , get any company's accounts that have been filed for 2 quid from Companies House.

Complex subject as company valuation can take many different forms i.e. may have no cash but owns a fantastic patent or makes no profit, but is cash or fixed asset rich or, or, etc. If it's just "are they generally in good shape and do they have some cash?" then get the accounts and /or a Dun & Bradstreet type report.

FB