Director Shareholder fund

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  • #31980
    tom5087
    Participant

    Help! we have a case whereby the Director of 3 companies (2 of which he is a sole director and the 3rd there are 3), has declared on his profit and loss accts that there are amounts of £161,332.00, £12,192.00 and £56,177.00 in the share holders fund. From past advise from IRRV we were informed to use these amounts as capital and claimant was nil entitled however, new claim received and new accountants have taken over the case and are disputing our decision. Has anyone come across any cases similar to this or know what to do with this?????

    #42426
    peterdelamothe
    Keymaster

    LOL – the shareholders funds have very little to do with the claimants capital for HB. Here is a definition:

    Shareholders’ funds is the balance sheet value of the shareholders’ interest in a company. For company accounts it is simply all assets less all liabilities.

    This amount can often be negative and it will sometimes include an amount of “goodwill” depending on the type of business. If the company has to be taken into account as capital then it may well help with a valuation. However it is often seen as an accounting exercise, trying to “bulk up” the value of the company with intangible assets that might attract outside investors or loans etc.

    I suspect the claimants accountant must think the Council has gone barking trying to rely solely on this!

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