26 November 2015
Is advance given by an NRI to a PVT LTD company for rendering of services to the NRI (of which he is a majority shareholder and Director) be treated as deposit under the Companies Act?
Would the answer be any different, in case a part of such advance is given to the Pvt Ltd as a loan?
As per the Companies (Acceptance of Deposits) Rules, 2014, any amount accepted from Directors shall not be treated as deposits, provided he/she gives a declaration that the amount so given is out of own funds and not out of borrowed funds. In this case, the amount is not a deposit as it is any advance for rendering services. The amount should be adjusted against services within 6 months. Also, prior board resolution should be passed for rendering of services to related party u/s.188.
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