Advances to directors
This query is : Resolved
24 June 2013
does any advances related to business given to directors of public co. attracts sec 295??
24 June 2013
Hi
If it is relating to company business, then it is not treated as loan.
If it is relating to company business, then it is not treated as loan.
24 June 2013
Non-applicability of the provisions of section 295:
Any transaction of making any loan or giving any guarantee or providing any security in connection with a loan made by any other person to, or to any other person will not apply on:—
1. any loan made to an employee of the company, who is not a relative of any director;
2. any loan or advance made to a trust in which directors are trustees;
3. any quasi-loan;
4. any advance or deposit made in connection with leasing/hire-purchase transaction;
5. any advance payment of salary given to an employee who is a relative of a director as per the rules of the company;
6. any investment made in acquiring residential accommodation for director(s) (whether by way of purchase or entering into a lease agreement);
7. house building loan given to a director subject to the guidelines issued for that purpose by the Central Government;
8. any loan made to a Registered Co-operative Society;
9. any loan given by a holding company to any director of its subsidiary company;
10. advance given for services to be rendered or goods to be supplied provided it is reasonable and commensurate with the services to be rendered or goods to be supplied;
11. section 295(1) does not apply to a government company provided that such company has obtained the approval of the Ministry or Department of the Central Government, which is administratively in charge of the company, or as the case may be or the State Government.
Non-applicability of the provisions of section 295:
Any transaction of making any loan or giving any guarantee or providing any security in connection with a loan made by any other person to, or to any other person will not apply on:—
1. any loan made to an employee of the company, who is not a relative of any director;
2. any loan or advance made to a trust in which directors are trustees;
3. any quasi-loan;
4. any advance or deposit made in connection with leasing/hire-purchase transaction;
5. any advance payment of salary given to an employee who is a relative of a director as per the rules of the company;
6. any investment made in acquiring residential accommodation for director(s) (whether by way of purchase or entering into a lease agreement);
7. house building loan given to a director subject to the guidelines issued for that purpose by the Central Government;
8. any loan made to a Registered Co-operative Society;
9. any loan given by a holding company to any director of its subsidiary company;
10. advance given for services to be rendered or goods to be supplied provided it is reasonable and commensurate with the services to be rendered or goods to be supplied;
11. section 295(1) does not apply to a government company provided that such company has obtained the approval of the Ministry or Department of the Central Government, which is administratively in charge of the company, or as the case may be or the State Government.
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