Whether a Company can pay incentives to Directors for providing collateral security against the loan availed?Under IT Act or Corporate Law is there any specific restriction?Company wants to give incentives @ 50% of the interest rate bank has advanced.Bank has lent at 8.5% so they want to give 4.25% per annum as incentives to the Directors who is providing collateral security.Is there any restrictions for this?
You can do so in Board Meeting, there is no restriction but subject to the provision of your company's articles.
Practically there is no such ristrictions.
It is suggested to pass a Board Resolution and insert provisions in AOA for the same.
Gupta Sachdeva & Co. Chartered Accountants
New Delhi
CA Final
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Naveen Fintech Pvt Ltd
Kolkata
CA Inter
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