Discharge of Calls on shares

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^^^ AJIT ^^^ (Querist)
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30 November 2009 A limited company had no money to pay directors’ fees. The directors thereupon paid into company’s bank account the amount remaining unpaid on their shares and retook the amount as fees. Does this give a discharge to directors’ liability to pay their shares?

Ankur Garg

Ankur Garg (Expert)
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30 November 2009 Hi,

Well as per my opinion this is not the correct way to injuct money in to the company.

If your company is a public limited company this amount may be treated as deposit read with deposit rules, 1975.

Futher kindly explain what do u mean by directors fees along with nature of this fees.

Regards

^^^ AJIT ^^^

^^^ AJIT ^^^ (Querist)
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30 November 2009 By director's fees, I mean sitting fees payable to directors for attending board meetings.

I am also of the view that calls is in the nature of trust and must be exercised bona fide for the benefit of the company.

In the given case, directors making calls only to enable them to draw their sitting fees is not at all bonafide and in the best interest of the company. So, in my view, the directors will not stand discharged from the liability to pay on their calls (unpaid dues) on shares.

Do you agree with me, Sir? Regards.

Ankur Garg

Ankur Garg (Expert)
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01 December 2009 I agree with you.

^^^ AJIT ^^^

^^^ AJIT ^^^ (Querist)
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01 December 2009 Thank you very much Expert. Regards.

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