DIRECTOR

735 views 6 replies

Ajay

Student

30 Points Joined September 2009

Pls help me out with the following..

1)When a bank advances loan to a Limited Company against the guarantee given by one of its directors as a collateral, whether the guarantee is to be with the Registered with the ROC? Will your answer will any way be different if the director gives his immovable property also as a security to bolster his guarantee, since the bank says that mere guarantee of the director will be of no value if not backed by any security?

2) The company advances to directors who travel very often for company’s business. Amount of such advances sometimes exceed the actual requirement. Will it contravene any provisions of the company’s Act?

Thanks a lot...

Replies (6)

Guest

Generally in case of closely held companies, where there are very few members, banks give the loan against the security of directors.

Because they want safety of their money.

As for the purpose of the loan, security is given by the directors it will not be considered as a charge nor a secured loan in the books of account of company. As company has given nothing out of its pocket.

In your books of account the loan amount would be considered as the unsecured loans.

If the company has given the Immovable property, then it would be a charge and a secured loan.

Ankur Shah (Practicing Company Secretary)

“Guru Gautam” Bungalow, Inside Parshwa Tower,

Nr. Shyamal Cross Road, 132ft. Ring Road,

Satellite, Ahmedabad – 15

Contact: + 91-9427633901

E-mail: ankurjewel @ gmail.com

Blog: csankur.blogspot.com

Guest

No need to worry about that, the directors takes more advances than the actual requirement.

The important thing is that the directors gives the statement of travelling expenditure correct or not.

It is tallied or not

Ankur Shah (Practicing Company Secretary)

“Guru Gautam” Bungalow, Inside Parshwa Tower,

Nr. Shyamal Cross Road, 132ft. Ring Road,

Satellite, Ahmedabad – 15

Contact: + 91-9427633901

E-mail: ankurjewel @ gmail.com

Blog: csankur.blogspot.com

Ajay

Student

30 Points Joined September 2009

Thank you Sir, for your reply. To the 2nd question, does it not contravene at all any provisions of company act?

Sir, am a student of MBA, I am learning corporate law as one of my subject.

Thank you for your assistance

Pravin Shinde

Team manager

31 Points Joined June 2009

One of my client has invested around 99% in one of the private Limited Co. However since he was in US he has made two of his friends as Director with 50% shares each. Now he is in india since July 2009 and want to become the director with 98% share. Let me know if this is possible and if yes how to go about it. Which all resolution is required etc. thanks in advance

Guest

Option 1:

First, retire one of the two directors.

Then In the same board meeting pass resolution appointing your client as the director of the company.

Option 2:

Pass resolution appointing your client as directors in the board meeting.

and also ensure that you have transferred all the shares to your client.

Whichever option you apply, you have to file form no. 32 with ROC.

I have given this reply keeping in view that your company does not require any qualification share holding for the purpose of appointing directors.

If you need further clarification than contact me

Ankur Shah (Practicing Company Secretary)

“Guru Gautam” Bungalow, Inside Parshwa Tower,

Nr. Shyamal Cross Road, 132ft. Ring Road,

Satellite, Ahmedabad – 15

Contact: + 91-9427633901

E-mail: ankurjewel @ gmail.com

Blog: csankur.blogspot.com

Pravin Shinde

Team manager

31 Points Joined June 2009

Thanks for your reply. However would like to check on one thing my client is NRI and probably would stay in india permanently starting july 2009.Also is it possible to continue the existing directors with 1% share each and introdure my client with 98% share ?. Is there any time line when can we pass the resolution or conduct board meetings. Please let me know.Thanks a ton.