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Payment made by director on behalf of company

This query is : Resolved 

27 December 2011 urgent
company director got the loan from his relatives in his saving a/c and then after paid same amount for company's license fees out of his saving account .
what accounting treatment should be given for this transaction in the book of company or is there any issue as per company act.

27 December 2011 No issues.

In your books--

License Fees A/c Dr....
To Director A/c

Later you can repay the same---

Director A/c Dr...
To Bank A/c..

28 December 2011 It is a violation of section 58A of the companies Act,1956 since director's can't give loan to company out of borrowed amount.


29 December 2011 Agreed with Chackrapani Ji. Compliance of Companies Deposit Acceptance Rule and section 58A of companies Act required



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