Memorandam & Articles of a private limited company allows business transaction for proft/gains from renting of immovable property inter alia.
The Managing director (who holds majority of shares) lets out a space to the company for rent, for say Rs. 20,000/-
The company, in turn, lets out the same space to other clients for rent (higher rates) for say Rs. 75,000/-
Only a resolution is passed at the board meeting that the company will hire space from the managing director, and in turn, rent out to the clients.
Is a resolution enough or a proper agreement has to be made between the company and the managing director?
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