A Pvt. Ltd. Co. has paid professional fees to its directors. After few months, Co. has suddenly required funds for a short term period.
Can Co. retake the such amount from its directors which was paid earlier as a professional Fees with the intention of return back it to its directors without interest ?
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Loan from Directors by Company
Replies (5)
NO THE COMPANY CAN TAKE REFUND OF THE PROFESSIONAL FEES.
IT'S A WEIRD ONE NOT IN CONSONANCE TO THE COMPANY LAW.
IT'S A WEIRD ONE NOT IN CONSONANCE TO THE COMPANY LAW.
No company cannot take such credit from its Directors which was paid as professional fees. It is not valid as per companies act.
Incase of refund from director it violation of Act
But professional fees can only be required back from directors when directors are defaulted, fraudlent or any conviction has occurred by them, then only such circumstances fees can be claimed back .
Section 180 of Companies Act, 2013 provides to take prior consent of the members of the company by way of a special resolution to borrow money, where the money to be borrowed, together with the money already borrowed by the company will exceed an aggregate of its paid-up share capital, free reserves, and securities premium, apart from temporary loans obtained from the company’s bankers in the ordinary course of business. Section 180 does not apply to Private Company and as such Private company can continue to borrow money by simply passing Board Resolution even if the borrowed amount exceeds the above-specified Limit.
If Director is also a shareholder: In this case, the amount received from the directors will be treated as Deposits from members and will have to comply the provisions of Section 73 read with the Companies (Acceptance of Deposits) Rules 2014 and Section 180 of the Companies Act, 2013 captioned above.
2. If Director is not a shareholder: In this case, the amount received from the directors will be treated as Deposits from Public and the provisions of Section 76 read with the Companies (Acceptance of Deposits) Rules 2014 and Section 180 of the Companies Act, 2013 will be applicable. In this case, the deposits can be accepted only by an Eligible Public Company (explained above) and will have to obtain credit rating every year. In case of a secured deposit, the company will have to create a charge on its assets in favor of the deposit holders for an amount not less than the amount of Deposit so accepted.
3. Directors lending out of their own Funds: If a Company receives the amount from the directors of the company or the relative of directors of the private company out of their own funds, it will be treated as Loans and do not attract the provision of Section 73 or Section 76 of the Companies Act, 2013. However, to avail such relief, the director or the relative of the director as the case may be, needs to furnish a declaration in writing to the effect that the amount is not being given out of funds acquired by him by borrowing or accepting loans or deposits from others and the company shall disclose the details of money so accepted in the Director’s or Board’s Report. Section 180 will be applicable to the Public Company.
Section 180 of Companies Act, 2013 provides to take prior consent of the members of the company by way of a special resolution to borrow money, where the money to be borrowed, together with the money already borrowed by the company will exceed an aggregate of its paid-up share capital, free reserves, and securities premium, apart from temporary loans obtained from the company’s bankers in the ordinary course of business. Section 180 does not apply to Private Company and as such Private company can continue to borrow money by simply passing Board Resolution even if the borrowed amount exceeds the above-specified Limit.
If Director is also a shareholder: In this case, the amount received from the directors will be treated as Deposits from members and will have to comply the provisions of Section 73 read with the Companies (Acceptance of Deposits) Rules 2014 and Section 180 of the Companies Act, 2013 captioned above.
2. If Director is not a shareholder: In this case, the amount received from the directors will be treated as Deposits from Public and the provisions of Section 76 read with the Companies (Acceptance of Deposits) Rules 2014 and Section 180 of the Companies Act, 2013 will be applicable. In this case, the deposits can be accepted only by an Eligible Public Company (explained above) and will have to obtain credit rating every year. In case of a secured deposit, the company will have to create a charge on its assets in favor of the deposit holders for an amount not less than the amount of Deposit so accepted.
3. Directors lending out of their own Funds: If a Company receives the amount from the directors of the company or the relative of directors of the private company out of their own funds, it will be treated as Loans and do not attract the provision of Section 73 or Section 76 of the Companies Act, 2013. However, to avail such relief, the director or the relative of the director as the case may be, needs to furnish a declaration in writing to the effect that the amount is not being given out of funds acquired by him by borrowing or accepting loans or deposits from others and the company shall disclose the details of money so accepted in the Director’s or Board’s Report. Section 180 will be applicable to the Public Company.
It's a typo error.
the director can lend their own funds .
but professional fees cannot be refunded.
the director can lend their own funds .
but professional fees cannot be refunded.
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