I am sole director of a limited company. The costs this year will exceed the available funds if everything was settled up. The company still has good cash in bank because it owes money to the director (myself) which has not been drawn.

I wish to keep the company open since future trading income and profits are due. No money is owed to any other party. My accounts now show negative share holders funds.

Is it OK to file accounts with negative share holders funds with HMRC and Companies House (UK)? Would the company be seen as insolvent? If I want to keep the company active do I need to inject funds e.g. via loan or share purchase?

This is a UK question.

  • Hi justf. This site is really about personal finance. Company finance isn't really on topic, except for very small companies. – DJClayworth Sep 12 '15 at 19:50
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    @DJClayworth This may be appropriate subject matter, provided the individual is the sole owner and employee of his company. Meta posts on the subject: Are small business questions on topic?, Are questions about single-person/family businesses on topic or not?. – Chris W. Rea Sep 12 '15 at 20:22
  • @ChrisW.Rea If it's a single-person company I agree. However the OP talks about shareholders... – DJClayworth Sep 12 '15 at 22:45
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    It is a single person company with the director as the sole share holder. A related question is when is a company insolvent? When it runs out of cash in bank or when it could not meet it's debts if forced to settle all pending debts today? – justf Sep 12 '15 at 23:20
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    A company is insolvent when it can not make a payment that it is legally obligated to make. – keshlam Sep 13 '15 at 3:12

IANAL (or an accountant), but there is a useful notion of "technical insolvency" which you it sounds like you probably meet, and which is a distinct concept from actual insolvency.

Couple of choice quotes from that link:

If a company (or person) is technically insolvent that merely means that it has a negative net asset value; its liabilities are greater than its assets. The significance of technical insolvency depends on circumstances: it may be an indicator of serious problems that may lead to actual insolvency, or it may be perfectly acceptable.


A technically insolvent company is free to keep trading as long as the directors reasonably believe that the company will be able to pay its debts, and, again, as long as an upaid creditor does not use the courts to force a liquidation.

which is basically what @keshlam's comment on your question is saying.

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