Sale of Business, Payouts and Liquidation of Company

Question

A company has sold its business. The funds from the sale have been taken out by the shareholders without liquidating the company. The company charges interest on the shareholders’ overdrawn current accounts. There was no capital distribution. Is there a deemed dividend situation in this case?

Answer

As long as interest is being charged on the overdue shareholder current account that should suffice. The recommendation would be to liquidate the company to get any capital gains from the sale out to shareholders.