Trasfer of Property - IMP

 The permissibility of your option of showing it as a loan depends on the nature of business of the Company, provisions made in the Memorandum & Articles - limits for loans to Directors and their relatives, pursuant to the Companies Act and the appropriate approvals obtained from the Board of Directors/Members as the case may be. If the process was not followed, the Audit query cannot be satisfied by taking a post-facto stand at this stage!

vasudevan

Dear Mr.V Vasudevan,

I am not sure but just testing the water if subsequently by passing a board resolution to this effect this defect can be cured before the accounts go to the auditors. Awaiting your clarification in this regard eagerly.  Thanks in advance.

Best regards

Daksh

Articles are silent on giving any loans to directors or their relatives. Objects clause allows the company to give loans and mortgages.

 Dear Daksh,

Thanks for your interest. Please read my contents carefully. I have clearly emphasized the need for obtaining the requisite approvals including resolution as a due process prior to sanctioning of the loan and HAS NOT suggested the same post-facto.

 Dear Mr. Kunal, Please provide at least bare details. Has the Board, prior to disbursement of loan passed any resolution. The limits and while passing the resolution the Director's whose brother has been given loan ought to have disclosed that he is an interested party in the transaction and abstained from the voting process. The voting excluding such director should have been majority to pass the resolution.