08-27-2009, 04:18 PM
I am repasting clause e of section 19 of section 2
any payment by a private company 3[as defined in the
Companies Ordinance, 1984 (XLVII of 1984)] or trust of any
sum (whether as representing a part of the assets of the
company or trust, or otherwise) by way of advance or loan to a
shareholder or any payment by any such company or trust on
behalf, or for the individual benefit, of any such shareholder, to
the extent to which the company or trust, in either case,
possesses accumulated profits; 4[or]
It is very clear that the above clause is relating to shareholder so it is not applicable only on executive director of a Private Ltd Company, who are directors by the virtue of their employment. But this clause will be applicable to the director of Private Company who is also the shareholder of the companay. In Pakistan majority of Private Ltd Companies are Family Ovned Companies. For instance, I hold 50% share of XYZ Pvt Ltd Co and remaining 50% shares are hold by my younger brother and we are both directors as well as shereholder so clause (e) will be applicable on both of us.
To clarify further I am qouting definition of Private Company as per CO,1984
"private company" means a company which, by its articles,â
(i) restricts the right to transfer its shares, if any;
(ii) limits the number of its members to fifty not including persons
who are in the employment of the company; and
(iii) prohibits any invitation to the public to subscribe for the shares,if any, or debentures of the company
Section 174 of CO,1984 lays down that a private company should have at least 2 directors and I think you are confusing with the word used in clause (e) that is SHAREHOLDER. The persons who hold shares in private limited company are also called shareholders. As per my limited knowledge there are only two types of directors are found in all types of companies 1. Directors (Hold shares of Pvt or public company ) and 2. Executive Directors (Directors by the virtue of their employment). Executive directors cannot make drawings so clause (e) of sub section 19 of section 2 of ITO,2001will be applicable to directors who fall under catagory 1.
For any clarification please feel free to ask any question
Regards,
Awais Aftab
any payment by a private company 3[as defined in the
Companies Ordinance, 1984 (XLVII of 1984)] or trust of any
sum (whether as representing a part of the assets of the
company or trust, or otherwise) by way of advance or loan to a
shareholder or any payment by any such company or trust on
behalf, or for the individual benefit, of any such shareholder, to
the extent to which the company or trust, in either case,
possesses accumulated profits; 4[or]
It is very clear that the above clause is relating to shareholder so it is not applicable only on executive director of a Private Ltd Company, who are directors by the virtue of their employment. But this clause will be applicable to the director of Private Company who is also the shareholder of the companay. In Pakistan majority of Private Ltd Companies are Family Ovned Companies. For instance, I hold 50% share of XYZ Pvt Ltd Co and remaining 50% shares are hold by my younger brother and we are both directors as well as shereholder so clause (e) will be applicable on both of us.
To clarify further I am qouting definition of Private Company as per CO,1984
"private company" means a company which, by its articles,â
(i) restricts the right to transfer its shares, if any;
(ii) limits the number of its members to fifty not including persons
who are in the employment of the company; and
(iii) prohibits any invitation to the public to subscribe for the shares,if any, or debentures of the company
Section 174 of CO,1984 lays down that a private company should have at least 2 directors and I think you are confusing with the word used in clause (e) that is SHAREHOLDER. The persons who hold shares in private limited company are also called shareholders. As per my limited knowledge there are only two types of directors are found in all types of companies 1. Directors (Hold shares of Pvt or public company ) and 2. Executive Directors (Directors by the virtue of their employment). Executive directors cannot make drawings so clause (e) of sub section 19 of section 2 of ITO,2001will be applicable to directors who fall under catagory 1.
For any clarification please feel free to ask any question
Regards,
Awais Aftab