14 November 2007
When a company has advance receivable outstanding from a educational society ( it being registered under society registration act, 1860) members being same in majority, does it needs to be disclosed in the auditors report in the annual return??, coming under the same management, section 370 (IB)
OR another interpretation is that the Sections like 301,370(IB) does not attract as it is not assigned a corporate status, being registered underthe society registration act, 1860
Question is how to substantiate that the disclosure not made in the Auditors report of annual return is correct??
14 November 2007
A Public limited company has given advance payment to a educational society registered under the Society Registration Act, 1860, 2 of the directors of the said company are also a part of that society as CHiarmana and member,
Now question is that does it attract section 301 and 370 (IB),and if yes then does the same needs to be disclosed in teh auditors report in annual return
Because the auditor in his report says that 1)Co has paid adv to one party covered in register maintained under section 301
and in other point says that
2) Co has not granted loans, secured or unsecured to parties listed under section 370 (IB) of the companies act
14 November 2007
LOAN TO DIRECTORS BY A PUBLIC LIMITED COMPANY* 140.1 Background note A company is permitted to make loans to its directors subject to certain restrictions and fulfilment of conditions. These restrictions are imposed in order to protect the interests of the shareholders. 140.2 Applicability The provisions given in this chapter are applicable to any loan given or guarantee provided or security given in connection with the loan made by any public company or a private company being its subsidiary to - u any director of the lending company or of a company which is its holding company or any partner or relative of any such director; u any firm in which such director or relative is a partner; u any private company of which such director is a director or member; u any body corporate at a general meeting of which not less than 25% of the total voting power may be exercised or controlled by any such director, or by two or more such directors together; u any body corporate the Board of Directors, Managing Director or Manager whereof is accustomed to act in accordance with the directions or instructions of the Board or of any director or directors of the lending company. *RELEVANT PROVISIONS : u Companies Act, 1956 : Sections 295, 296. u Companies (Central Government’s) General Rules and Forms, 1956. u Standard Listing Agreement. APPLICABILITY : PUBLIC LIMITED COMPANY. 140.2-1 Applicability to book debts The provisions given in this chapter are applicable to all transactions represented by a book debt which was from its inception in the nature of a loan or advance. 140.3 Non-applicability The provisions given in this chapter are not applicable to the following loans or guarantees or securities - u Loans made by a holding company to a subsidiary or guarantee given or security provided by a holding company in connection with a loan to its subsidiary; u Loans made or guarantee given or security provided by a private company which is not a subsidiary of a public company ; u Loans made or guarantee given or security provided by a banking company; u House building loan to Managing Director or whole-time director or any guarantee given by the company in connection with the house building loan. However, the terms and conditions of house building loan should be on the terms and conditions as are applicable to all its employees.
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