Dikshay Chandaliya (49 Points)
16 March 2023
Ayush
(Executive )
(6760 Points)
Replied 16 March 2023
No, a private limited company cannot give a security deposit for an office space that is registered in the name of its director. This is because the director is considered to be a related party, and any transaction with a related party must be done at arm's length and on a commercial basis.
Therefore, if the company is taking office premises on rent, it should be in the name of the company and not the director. Additionally, the company should pay the security deposit directly to the landlord or the property owner, and not to the director.
Chirag
(Professional)
(1979 Points)
Replied 17 March 2023
Jatin Bajaj
(CS)
(2930 Points)
Replied 04 May 2023
The Rent Agreement should be in the name of the Company and not in the name of Directors, as any non compliance may result the directors personally liable for the consequences arising out of the breach of the Agreement.
Further giving rent to the director for office purpose, a Board resolution needs to be passed after checking the condition that if it is in the ordinary course of business and is at arm's length price.
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