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Payment made by director on behalf of company

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(Querist)
27 December 2011 urgent
company director got the loan from his relatives in his saving a/c and then after paid same amount for company's license fees out of his saving account .
what accounting treatment should be given for this transaction in the book of company or is there any issue as per company act.
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CMA. CS. Sanjay Gupta

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CMA. CS. Sanjay Gupta (Expert)
27 December 2011 No issues.

In your books--

License Fees A/c Dr....
To Director A/c

Later you can repay the same---

Director A/c Dr...
To Bank A/c..
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Bhaskaran Chackrapani Warrier

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Bhaskaran Chackrapani Warrier (Expert)
28 December 2011 It is a violation of section 58A of the companies Act,1956 since director's can't give loan to company out of borrowed amount.
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CA. Krishna K Neeraj

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CA. Krishna K Neeraj (Expert)
29 December 2011 Agreed with Chackrapani Ji. Compliance of Companies Deposit Acceptance Rule and section 58A of companies Act required
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