Accounts of a Private Limited

Company A (Pvt. Ltd.) is crediting all its revenue in its bank account, but none of the expenses were paid through bank. No cash withdrawn. Most expenses were paid through personal cash / credit cards of directors. Can it be shown as Expenses incurred by company and reimbursable to directors. Are there any provisions under companies act which prohibits / limits such transactions.   

Further as we understand there is no limit to director's remuneration in a Pvt. Ltd. So can these expenses be adjusted to director's remuneration payable by company. Do we need to declare such remuneration in any of the forms to MCA or it only needs to be recorded in the minutes of AGM.
 

Replies (2)
Quick Summary
This discussion explores how a Private Limited company can account for expenses paid by directors using personal funds and credit cards. It clarifies that these can be treated as reimbursable expenses or adjusted against director's remuneration, with no specific limits under the Companies Act. Related party transactions, including director remuneration and expense reimbursements, must be reported in annual ROC forms.

1. Directors to give their expense reimbursement voucher and the same can be booked as expense in the company.

Dr. Expense
Cr. Creditor

Dr. Creditor
Cr. Expenses Payable to Director


No prohibition / limitation on such transactions under provisions of the Act.

2. No limit on Directors Remuneration.

Dr. Director Remuneration
Cr. Expense Payable to Director

The Related party transactions need to be reported in Annual ROC forms

Thank you for your reply. Now, there are many payments which has been made by director's on behalf of company.

In Annual ROC form, do we need to report only director's remuneration. Or we also have to report, expenses incurred by director and reimbursed by company.

A reply on this would appreciated.

 

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