Payment of salary advance to whole time director

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Rishi Tandon (Querist)
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20 July 2015 Can any body provide me the procedure and format of resolution for giving salary advance to whole time director in pvt. company

Rishi Tandon

Rishi Tandon (Querist)
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20 July 2015 Any answers for the above question. Pls reply its urgent

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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09 August 2024 Certainly! In a private company, if you want to provide a salary advance to a Whole Time Director, you need to follow a specific procedure and pass a board resolution to ensure that it is in compliance with corporate governance practices and legal requirements.

Here’s a step-by-step guide and a sample format for the resolution:

### **Procedure for Payment of Salary Advance to Whole Time Director**

1. **Review the Company’s Articles of Association (AOA):**
- Ensure that the payment of salary advance to a Whole Time Director is permitted under the company's Articles of Association and complies with the provisions of the Companies Act, 2013.

2. **Check for Compliance:**
- Verify if any prior approval is needed from the shareholders or the Board of Directors for such advances, as per the company’s policy or regulatory requirements.

3. **Prepare the Resolution:**
- Draft a Board Resolution to authorize the advance payment of salary to the Whole Time Director. This resolution needs to be passed at a Board meeting.

4. **Hold a Board Meeting:**
- Schedule a Board meeting and ensure that all directors are given proper notice of the meeting.

5. **Pass the Resolution:**
- During the Board meeting, present and pass the resolution regarding the advance payment of salary.

6. **Document the Resolution:**
- Record the resolution in the minutes of the Board meeting. The resolution should be signed by the Chairman and the Company Secretary.

7. **Disburse the Advance:**
- After the resolution is passed, proceed with the disbursement of the salary advance as authorized.

8. **Update the Company Records:**
- Reflect the payment in the company’s financial records and ensure proper documentation for future reference.

### **Sample Board Resolution Format**

Here is a sample format for the Board Resolution to approve the payment of a salary advance to a Whole Time Director:

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**[Company Letterhead]**

**BOARD RESOLUTION**

**Date: [Date of Meeting]**

**Place: [Meeting Place]**

**RESOLUTION PASSED AT THE MEETING OF THE BOARD OF DIRECTORS OF [COMPANY NAME] HELD ON [DATE]**

**Subject: Payment of Salary Advance to Whole Time Director**

**“RESOLVED THAT in accordance with the provisions of the Articles of Association of the Company and subject to compliance with the applicable provisions of the Companies Act, 2013, the Board hereby approves the payment of an advance against the salary of [Whole Time Director’s Name], Whole Time Director of the Company.**

**RESOLVED FURTHER THAT the advance amounting to ₹[Amount] be paid to [Whole Time Director’s Name] as per the terms and conditions approved by the Board, and that the advance be adjusted against the future salary payments.**

**RESOLVED FURTHER THAT [Name of the Authorized Person], [Designation], be and is hereby authorized to take all necessary actions and to execute and deliver all such documents and instruments as may be necessary to effectuate the above resolution.**

**RESOLVED FURTHER THAT the advance payment be recorded in the company’s financial records and treated in accordance with the applicable accounting standards and policies.**

**RESOLVED FURTHER THAT a copy of this resolution, duly signed by the Chairman, be provided to [Whole Time Director’s Name] and the necessary entries be made in the company’s records.**

**Certified True Copy**

**For [Company Name]**

**[Name of the Chairman]**

**Chairman of the Board**

**[Name of the Company Secretary]**

**Company Secretary**

---

### **Key Points to Remember:**

- Ensure compliance with the Companies Act, 2013, and the company’s AOA.
- The resolution should be passed by the Board of Directors and recorded in the minutes of the meeting.
- The advance should be properly documented and adjusted against future salary payments.
- Maintain clear records of the resolution and the payment for audit and compliance purposes.

By following these steps and using the sample resolution format, you can ensure that the payment of a salary advance to a Whole Time Director is handled correctly and in accordance with legal requirements.

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