Waiving of Loan

This query is : Resolved

sayeeda (Querist)
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20 April 2009 Hi
Can a public company waive the loan due from directors. What are the consequences.
Can the company declare dividend and adjust the balance due from directors against the dividend to be paid by the company and pay the dividend distribution tax.

Thank u
Regards
CA Sayeeda

CS SIDDHARTHA BANIK

CS SIDDHARTHA BANIK (Expert)
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21 April 2009 As per my opinion, the Companies Act has not provided any such provisions to waive loan due from Directors by a public Company. Hence, this is not permissible.

Others views are solicited.

Thanks,

CS Siddhartha Banik

Ankur Garg

Ankur Garg (Expert)
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30 April 2009 Hi,

As per section-293(1)(b) waiver of loan due from a director is very much possible in the Companies Act, 1956.

For that approval of shareholders is required by passing a Ordinary Resolution in the GM in compliance with section-293(1)(b).

ADJUSTMENT OF DUE

Yes it is also very much possible.
Just check proviso to section-207 and see clause (d).

As per my interpretation of clause (d) such adjustment is very much possible.

Revert for further query...

Best Regards