Directors not to hold office or place of profit

A company borrows from a financial institution and the promoter director gives guarantee to the financial institution for the borrowings made by the company. Whether the payment of Guarantee Commission to the promoter director by the company violates the provision of Sec 314?

Replies (4)

This will come within the deeming provisions under section 314(3).

Yes section 314 is applicable .Pls go through Section 314(3) (a).you can find answer to this question.

Regards

Rekha Sharma

Is it given anywhere in Ramaiah that guarantee commission paid to promotor director is exempted from Sec 314?

No i have not find such exemption so far anywhere except in M.C.Bhandari. where it is mentioned that section will not apply for guarntee commission or interest  on loan paid to directors of the company .




 


 however it  is clear from Sec.314 (3) that  if a director receives anything over and above the sitting fees /remuneration to which he is entitled as director section will apply. In this case mentioned by you i think  section will not apply . You can check my opinion from other expert also.




 


Regards




 


Rekha sharma

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