Capital Accounts - company shares

Hi @Lubos,

I want to submit my ideas of further implementation of the “Capital Accounts” module. First of all, the assumption: in a company of shares you have a certain number of shares that are subscribed by the shareholder, ie 100 shares of 1.000 euros (nominal value) give a total equity of 100.000 euros

In the bank transactions I can receive money against an equity account lets say of shareholder A and I can set quantity and unit price. If I look in the capital account I can find:

Lets start with what should implemented in the input interface:

  1. In the starting balace there should be the possibility, like for the inventory to set: Nr. of Shares x Average Value = Starting Balance
  2. In the journal entry, again, there should be the possibility, like for the inventory to set the quantity and not only debit and credit

Done this lets talk about report. First of all we need to define the current share value which should be calculated as the value of the NAV (equity + retained earnings) at a certain date divided by the number of shares at balance sheet. That said:

  1. under the Capital Account Tab we should have a calculation of the average price of the units, the current value of the share partecipation and the plus/minus of partecipation:

  2. under reporting we should modify the statement of changes of equity like this:
    I would also move it to capital accounts report section but it’s not important

  3. the current capital account summary should show again be modified to show both the book value and the current value at a certain date

  4. there should be also, like for the inventory, a report that shows the movements by quantity

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Any considerations about this?

This would be out of the scope of the requirements for most users. It can possibly be developed by someone in future as a specialized add-on module connected to Manager through the API.

For how the software is structured right now I think that it would be faster to add this couple of changes that developing an external module. @lubos?

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To add one request to this idea

we should be able to set an opening balance per person for every sub capital account rather than doing it though JV. currently, we can do it only by creating a clearing account in the liability then creating a JV to Transfer to Capital account

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If I understand your question, you already can, @abdulbari. You do this under Starting Balances: Manager Cloud. This will affect the capital account holder’s net capital balance. This assumes you are referring the the subsidiary ledgers under Capital accounts, which tabulate each capital account holder’s position.

However, if you are referring to capital subaccounts (Funds contributed, Drawings, Share of Profit), that is unnecessary. Starting balances are used only once, when migrating to Manager from a previous accounting system. When setting starting balances, the net position of the capital account holder is selected (Amount to pay or Paid in advance). The subaccounts are used only for subsequent transactions. Their purpose is to instruct Manager on how to post transactions. You do not, for example, set a starting balance for a member’s Drawings subaccount. Instead, you set the member’s overall capital account position as of the migration date.

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I’m not sure whether this would be part of “Capital Accounts” or some new tab. This looks more like a share register where you track shareholders of the company.

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Basically, the way it should work, it is the same of the inventory movements.

I support this idea, however due to my voting count. I can’t vote it. Currently, I’m working in a private company where there are in the middle transferring between two states, which the HQ function are transferring here. They also plan to transform to public limited company. My main concern is how to handle shares transaction. in Capital Account. Any tips for me?

Right now you have to manage this with journal entries unless it’s a drawdown from the shareholders. In this case you should use a payment.

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As you are changing your legal form of organization, you should almost certainly begin a new company in Manager.

Why? It’s not a new company

It might be, depending on how local law views various forms of organization. For example, in many jurisdictions, a sole trader who takes on a partner is actually terminating the proprietorship and launching a partnership that is considered a different company, even if the partnership assumes the obligations and operations of the proprietorship. And a partnership that decides to sell shares publicly becomes a corporation, which is a distinct legal entity, subject to different taxation and liability rules.

@acecombat2 did not specify the jurisdiction or original operating structure, only that the company was transforming to a public limited company. That terminology means different things in different places.



Malaysia Accounting Standard Board (MASB) as far of what I know, it follows between United Kingdom’s and Australia’s Standard. So @Tut suggestion is valid. Closing the books for private limited. Then opening the new one.

  1. I have no experience regarding handling shares.
  2. I willing to learn however in Manager there is no guide on handling the shares. @Davide do you mean I have to create a special account with sub-ledger for every shareholders? Then use journal entries to transact between them? my issue is that journal entries can’t use bank or cash account in a way confusing when I have to switch between journal entries and bank/cash account when its related to those.

Definitely a share register feature.

If by public limited company, you mean listed on the stock exchange then you should use a share registry service for share transfers, not the accounts. The selling of shares from person A to person B is not a capital accounts transaction of the public limited company - it is a transaction between the two individuals.

A public limited company’s capital account is for the number / value of shares on issue, not the ownership of those shares.

I’m sure he talking about IPO and how to properly account for share issued.