Acknowledgement of siiting fee as debt of a company

sivaram (Asst Mgr-Taxation) (6918 Points)

10 January 2012  

Kind Attn: Practising Company secretaries

How far Balance sheet an acknowledgement of a debt of a company? Board of directors passeda resolution for payment of sitting fees to directors and the same was shown as fees due to directors in balancesheet Whether this can be considered as an effective enforceable acknowledgement of debt by the company

Solution Any amt shown in liablity is a company debt that i can understand

The directors should not be interested in the matter.If the directors have interest in the matter then they are not capable of binding the company by passsing any resolution .hence it cannot be said that the outstadning sitting fees shown as a liablity in balance sheet is not an acknowledgement of debt by the comapny

cn any one explain the second point on directors interest what it is and what it is conveying 

Please reply and give your valuable views Thanks in advance