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Company related query.........

Ajnas (Student) (844 Points)

27 November 2021

Company X Ltd business Expense Rs.60000 paid by Mr.A(company X Ltd director Z friend) and company X reimbursement such amount to Mr.A, is any violation in companies Act 2013? this reimbursement is considered as loan or deposit as per section 73?

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4 Replies

CA Aakarsh Jain (CA) (10431 Points)
Replied 27 November 2021

Assuming that Mr A is only friend of Director Z and is not covered under the definition of Relatives as per Companies Act, 2013, there is no violation of any provision on making such transaction.
However, if Mr A is relative of Director then its a related party transaction and company will have to comply with Section 184 and section 188 respectively.

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CA. Sourav Sarkar (Chartered Accountant ) (24588 Points)
Replied 28 November 2021

It will be treated as related party transactions

sabyasachi mukherjee (27719 Points)
Replied 28 November 2021

Since the disclosure related to third party transactions are not mentioned , but there cannot be any such violation. As per companies act 2013 it's a third party transaction.

Ajnas (Student) (844 Points)
Replied 28 November 2021

Ok sir thanks, That means reimbursement of business expense paid to third party like director's friend, other person (others than relative of director, share holders )etc.is not covered under the section 73 as loan or deposit?