Director's loan for HK company

[thomasparra]

Hi all,

I was wondering if there were any specific documents to fill to make a director's loan for my HK company? Or it will just be handled by the accounting team during audit. The way I see it, I can just transfer funds from personal bank account to the company bank account, and transfer it back at a later time.

 

[Sols]

You need a loan agreement which specifies the amount, duration, and other terms of the loans. It's an easy process. Your accountants can probably help you draft one.

Look out for minimum interests and restrictions on loan forgiveness that may apply under local law (HK and, if different, where you live). A loan that's too generous may be considered a capital injection or even income in some cases. That's mainly for the other way around, though, when company lends to director under such favorable terms it's basically a dividend/salary.

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This is the probably the answer to your question.

 

[thomasparra]

Sols said:
You need a loan agreement which specifies the amount, duration, and other terms of the loans. It's an easy process. Your accountants can probably help you draft one.

Look out for minimum interests and restrictions on loan forgiveness that may apply under local law (HK and, if different, where you live). A loan that's too generous may be considered a capital injection or even income in some cases. That's mainly for the other way around, though, when company lends to director under such favorable terms it's basically a dividend/salary.
Click to expand...

Thanks! I will do that. Cheers

 

[daniels27]

Check part B here
https://www.hkicpa.org.hk/en/Tools/...es-Ordinance/CO-rewrite---non-transitional-QA
Please share you findings here.

Are you the only member of the company? Because directors loans require the approval of the companies members for obvious reasons.

Last edited: Feb 25, 2024

 

[daniels27]

If you need a template for the agreement, you can use this one:
https://www.sec.gov/Archives/edgar/data/1597846/000149315216012324/ex10-6.htm

 

[AlicaFunk]

daniels27 said:
If you need a template for the agreement, you can use this one:
https://www.sec.gov/Archives/edgar/data/1597846/000149315216012324/ex10-6.htm
Click to expand...

comes in handy, thanks.

 

[thomasparra]

daniels27 said:
If you need a template for the agreement, you can use this one:
https://www.sec.gov/Archives/edgar/data/1597846/000149315216012324/ex10-6.htm
Click to expand...

Thanks, super helpful

 

[burden]

have been using this one in the past
https://www.lawdepot.com/contracts/loan-agreement/?loc=US

 

[daniels27]

Any body had a recommendation for a cheap audit in Hong Kong?