What if a director of a company starts a proprietor firm simultaneously?

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A company director, even with a significant shareholding (like 49%), can indeed establish and own a separate proprietor firm. Transactions between the company and the director's proprietor firm are permissible and can be recorded as a debtor-creditor relationship. However, it is crucial to disclose these as related party transactions to maintain transparency.

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(Querist)
02 May 2023 Hi Experts,

Can a company director holding 49% shares of a company be a proprietor of another company distinctly?
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CA R SEETHARAMAN

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CA R SEETHARAMAN (Expert)
02 May 2023 Yes, he can be no problem.
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Mayur Dixit

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Mayur Dixit (Querist)
02 May 2023 Hi Sir,
However, I guess the transaction in between them cannot be shown as debtor-creditor relationship? Any advise
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CA R SEETHARAMAN

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CA R SEETHARAMAN (Expert)
02 May 2023 Yes, it can be shown as debtor creditor relationship. But should be disclosed as related party transactions.
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