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directors loans

(6 Posts)
not2tall Wed 20-Mar-13 18:52:50

advice needed: I just resigned from a small not-for-profit business. I'm currently owed a director's loan of £4200. the company is refusing to replay my loan as they say this is in contravention of their not-for-profit status; namely, this article:
5.The income and capital of the organisation shall be applied solely towards the promotion of the objects of the organisation; and no part of the income or capital shall be paid or transferred, directly or indirectly, to the members of the organisation, whether by way of dividends or bonus or otherwise in the form of profit.
are they correct? or should I continue to request repayment? Many thanks for any advice.

flowery Wed 20-Mar-13 19:40:06

What proof have you that you are owed the loan?

Anifrangapani Wed 20-Mar-13 19:47:24

Do they pay their other loans. All the nfp organisations I know the finaces of have loans that the pay off at commercial rates.

Gigondas Wed 20-Mar-13 19:51:39

Also members in corporate law means shareholders . I would agree with ani that nfp can pay off commercial loans so I don't think this clause debars them unless the return on loan is based on profits or income rather than straight interest. Am not a specialist though.

not2tall Wed 20-Mar-13 20:36:49

Hi - I have written evidence of the loan, including a recent summary of accounts which specifically states "Loan Each 4252". the loan was not made as a lump sum; it was accrued over time basically by paying ourselves low wages at times of high income. thanks for responding to this. It's a resignation I had to make by necessity, a business I originally started, and I've been left without any income at all, so I'm keen to get any money that's legally mine.

not2tall Wed 20-Mar-13 20:44:51

just adding to that: the accounts also record the loan as "shareholders loan"

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