Good day everyone,
If a Director’s Current Account is in credit, what is a reasonable interest rate for him to charge the company, if any?
The reason I ask is because I want to buy into a Company however my partner/ the other 50% Director has a R4 700 000 loan account in his favor. Up until this point he has not charged any interest on the capital by now with the restructuring he is considering it.
What are the implications of this for the company's profitability? I mean would it not be fair to say that the interest of the loan account is paid out in the form of Dividends and that the capital appreciation of the company's assets will/should cover this interest? Im just trying to clarify as I want to be as fair as possible.