Deposit or loan
This query is : Resolved
23 November 2013
An unlisted public company's director has brought in cash in the company. Whether it should be treated as loan or deposit?
23 November 2013
Purely loan, no question of deposit for such amount
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23 November 2013
It will be treated as loan and it will not be considered as deposit, because loan taken from director is not considered as deposit.
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23 November 2013
Providing finance to the company may not be considered as or equated to sale of goods or materials to the company. So also, the same would not tantamount to supply of any services by a director to the company. The consent of the Board of directors pursuant to section 297 would not, therefore, be required. Whereas providing funds to the company may not be considered as a contract falling u/s 297, the same is definitely an arrangement in which director is directly or indirectly interested or concerned and therefore, the disclosure pursuant to section 299 would invariably be required to be made to the Board of directors of the company. Even after disclosing his interest, the concerned director should not take undue advantage because his position is very much like that of a trustee as was held in Kashinath v New Alok Ginning & Pressing Co. Ltd. (1950) 20 Comp Cas 225 (Nag).
Providing finance to the company may not be considered as or equated to sale of goods or materials to the company. So also, the same would not tantamount to supply of any services by a director to the company. The consent of the Board of directors pursuant to section 297 would not, therefore, be required. Whereas providing funds to the company may not be considered as a contract falling u/s 297, the same is definitely an arrangement in which director is directly or indirectly interested or concerned and therefore, the disclosure pursuant to section 299 would invariably be required to be made to the Board of directors of the company. Even after disclosing his interest, the concerned director should not take undue advantage because his position is very much like that of a trustee as was held in Kashinath v New Alok Ginning & Pressing Co. Ltd. (1950) 20 Comp Cas 225 (Nag).
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