Okay, so I was wrong in what I guessed Cloud Imperium UK Ltd had done.
So what they have in fact done, is moved £1m from the share premium account to a new special reserve, reducing the £23.7m to £22.7m in the share premium account.
Since the company is technically insolvent, there are restrictions on what they can do with cash they have, which they only have via the share premium account. Namely pay dividends.
Goodman Jones said:
A common frustration
A number of our private international clients – including Russian, Italian, Spanish and US companies – have seen real benefit from this change in Company Law.
We recently worked with a Russian group that owns a UK company with valuable intellectual property rights. The UK subsidiary did not have reserves large enough to pay dividends, but it held a fair amount of cash that it wished to distribute back to the parent. It also had a large share premium reserve. The group assumed it would be difficult to declare a dividend – as it would be in Russia. Specifically, they expected to be involved in a difficult and lengthy process involving large legal fees. Yet the directors were surprised by how easy and quick it was to create distributable reserves from their current structure and declare a dividend back to the parent company.
Another of our clients, an Italian fashion chain with a UK subsidiary, was historically loss-making because of its expensive location. The subsidiary had then started making profits, but again had insufficient reserves to declare a dividend. We advised the group to undertake a capital reduction in order to convert the share premium reserve into a distributable reserves. Although, they were aware that this could be done, they were concerned about the cost and the time commitment. They were staggered by the ease with which the process was completed.
The only logical reason to do this is if you want to take £1m out of the technically insolvent company that is only propped up by a recent infusion of capital. Very odd. If they do declare a dividend, it won't be public until December of the year after when the accounts are filed. Such a small amount though, perhaps they will repeat this process in future.
Here's their accompanying statement saying they are a solvent company for the next 12 months. Erin possibly spoiling a feature of Odyssey expansion by signing ED Robots.
[timg]https://i.imgur.com/HHkoMBD.jpg[/timg]
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