Acknowledgement of siiting fee as debt of a company

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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

Replies (5)

Dear Sivaram,

 

There is no need to pass any board/ general meeting resolution.

 

Sitting fees shown as liablity in itself constitute a debt for the company.

 

Regards

Sitting fee as payable in balance sheet is "Expnese Payable" not a "Debt".

Further, Resolution appointing such director specifies the Sitting fee to be payable to Director for attanding the Board Meeting. When the Director attands the board meeting (Minutes of Board Meeting is sufficient proof) sitting fee becomes payable automatically. No further resolution is required to make the fee payable, so the question of interest of directors is irrelevant.

Audited balance sheet of the company (and also adopted by members in GM) signifies that the Auditor has observed the all relevant documents (minutes/attandance register) to ensure the fee payable is fairly booked in the books of accounts.

 

Kind Attn: Neha/K.K.K

 

The Problem and the answer is given by an author who is a company secretary  since he has given the answer in such fashion I am seeking more clarity on directors Interest on passing resolution 

Dear Sivaram,

 

Please correlate your query with reply of CS Neha Jain, Answer is visible there.

For more clarity, elaborate your query.

Mr K.K.K.

The Problem and solution is reproduced as it is from the book

Now Iam seeking more clarity on  point which starts as directorsishould not be interested 

Namely the second part of the answer to the problem 


CCI Pro

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