Go AD-FREE with CAclubindia Pro and Daily WhatsApp Updates. Subscribe Now!

rent agreement

Others 510 views 2 replies

Suman Khurana

ACS

209 Points Joined June 2009

Status: A Ltd. has taken on rent a building named C and it has incorporated a pvt. ltd company named B pvt. Ltd with 49% shareholding. Now A ltd. wants to give on rent one floor of building C to B pvt. ltd.

Query: Is there any limit of charging the minimum rent from the B pt. Ltd. by A ltd. (i.e. any amount can be charged as rent from B pvt. ltd. like Rs. 1500/- per month)?

My Opinion: Nothing is prescribed for charging the minimum rent. Any amount can be charged as rent. Further One should see the rent agreement entered by A ltd. with the owner of building C to know whether A ltd. can further rent the building to other person.

Please answer this.

Thanks in advance.

Regards

Hinna Garg

Replies (2)

Suman Khurana

ACS

209 Points Joined June 2009

Replyyyyyyyyyyyyyy

Malav Shah

Company Secretary and AVP Legal

171 Points Joined June 2009

Under Company Law, there is no limit for charging rent by the Company. But you need to check this with your Auditor. Under CARO, they have to ensure that there is justification for giving property free of rent as this will be against the interest of the company.

Regards

Malav Shah