Advacne salary to director

Ashish Sharma (Service)     02 December 2014

Ashish Sharma
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Please advise can we advance Salary to Director for Three Months. Is this count as loan to Director.



P C Agrawal (Vice President (Corporate))     03 December 2014

P C Agrawal
Vice President (Corporate) 
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Sec.185 puts restrictions on giving 'loan' (and  not 'advance') to  directors.  'Loan' means lending  of money with absolute promise to  repay, whereas 'advance' is to be adjusted against supply of goods and services.  One can argue that advance given against current month's salary is  not loan.  However, it will be difficult to make this argument if advance is given for 3 months, which  will be in the nature of loan.


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