Form inc-22

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 May 2014 DIRECTOR HAS A PROPERTY WHICH HE HAS TAKEN ON LEASE.NOW DIRECTOR WANTS COMPANY TO USE THAT PROPERTY.
IS IT POSSIBLE THEN NOC FROM DIRECTOR WILL SERVE THE PURPOSE

Sandeep Dharar

Sandeep Dharar (Expert)
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19 May 2014 Yes it can b possible but legal requirements must b needed for that.

Message likes : 1 times

Querist : Anonymous

Querist : Anonymous (Querist)

19 May 2014 what are the legal requirements?
can you say
i have the lease deed signed by director

Asha Kanta Sharma online

Asha Kanta Sharma online

(Expert)
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25 July 2024 When a director of a company wishes to allow the company to use a property that they own, typically for office space or any other business-related purpose, several legal requirements and considerations need to be addressed:

1. **Conflict of Interest**: Directors have a fiduciary duty to act in the best interests of the company. Any transaction between a director and the company must be conducted at arm's length and in accordance with the Companies Act, 2013 (or relevant legislation in your jurisdiction). This means the transaction should be fair and reasonable, and not disadvantageous to the company.

2. **Board Resolution**: The board of directors must pass a resolution approving the use of the director's property by the company. This resolution should explicitly mention the terms and conditions of use, including any rental or lease arrangements, duration of use, and other relevant details.

3. **NOC (No Objection Certificate)**: While an NOC from the director may indicate their consent, it is not sufficient on its own. The board resolution is essential as it formalizes the decision and ensures compliance with legal requirements.

4. **Disclosure**: The director must disclose their interest in the property to the board of directors. This includes providing details of the property, any existing lease agreements, and the proposed terms under which the company will use the property.

5. **Approval by Shareholders (if applicable)**: Depending on the value of the transaction and the company's articles of association, shareholder approval may be required. This is typically necessary for significant transactions or those involving related parties.

6. **Stamp Duty and Registration**: Ensure that the lease or rental agreement, if applicable, is properly stamped and registered as per local laws. This is crucial for legal enforceability.

7. **Compliance with Other Laws**: Verify if there are any specific regulatory requirements or restrictions regarding the use of director-owned property by the company. This may include zoning laws, local building codes, or SEZ regulations if applicable.

8. **Tax Implications**: Consider the tax implications for both the director and the company regarding rental income, deductions, GST implications, etc. Seek advice from a tax consultant if necessary.

In summary, while an NOC from the director is a good starting point to indicate consent, the formalities and legal requirements involve a board resolution, disclosure of interest, and compliance with applicable laws and regulations. It's advisable to consult with legal and financial advisors to ensure that all steps are followed correctly and to avoid any potential conflicts of interest or legal issues.

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