Let's briefly talk about the nature of this account. It belongs to the shareholders/directors who uses their own name on behalf of the company to pay out or receive money. In general, the company's income and expenditures should be paid through the company's bank account or in cash, but often times the owner may collect or pay checks for the business. Therefore, such an account will appear on the company's financial statement.
You may ask will the money need to be paid back from time to time?
The answer is YES. But this is different from the typical way of borrowing money. Under normal circumstances, borrowing will require interest and a specified repayment period, not to mention mortgages, and so if it appears on the accounts, you should not be surprised by it when you understand about the established share capital of a limited company, and setting a cap for the amount shareholders need to invest in the company, this is something that happens frequently. For example, if a company's share capital is set at HK$10,000, the excess will be appropriated as a loan (to be repaid).
In general, when a company lacks cash flow, there are two methods for financing: Issuing additional shares or through lending. Then the shareholders can choose which method to put additional funds into the company.
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