LOANS TO DIRECTORS.

Waikato Times, Volume 121, Issue 20271, 13 August 1937, Page 9

LOANS TO DIRECTORS.

A QUESTION OF LAW. INTERPRETATION OP ACT. A correspondent lias asked tlic editor of the New Zealand Accountants’ Journal for an interpretation ol Section 136 of the Companies Act on the following points: — (1) Is It necessary to show the amount of loans to directors in Ihe annual accounts when such dh-eclurs are salaried ofllcers of Ihe company’.’ (2) What is your definition ut “loans”? Does II extend l„ purchases from Ihe company by a lor when such purchases are not paid for by monthly account -in oilier words when there is a eonsiderahle sum always ow luff, all hough 111 lids res -I Ihe diroelor may he In the position as other ruslomers of (lie company'; The following reply is given In tin current issue of the Journal: — “In view of Ihe fact that purugrnpl (a) of sub-seeiion I I) of SeePou 1 31 of Ihe Comp.,lll.- \ct. 1933. pr lei lhat the hi il ol any loans advaneei by a company lo a lor or ait ufllerr should be dnlicaled in Ihe balance she,-I. it appears lo ns lo ]„: necessary lo show silrh advances wlu-lhrl direclors are salaried ofllcers or not We would. Il inner, draw nlleulioi lo sub-see lion ■> which reads: 'Tin provisions of "111, see me of llih see I ion willi i'es|.oel lo loans shall no apply- a in of a Ihe ordinal': business of which in eludes lending of money, lo loan made h- Ihe noinpanv in the ord innrv mi's ' lis business: or b 10 a loan by company I cm mb' evened V 2llllO and is eei'lilled li Ihe direclors of a cumpunv I" hav been made in a,cor,lame willi an practice adopted or about In h adopted by Ilio company with rc sped do loans In ils employees.’ “In respect In Hu* ml point, w do not consider lliat tin* term *l«>at covers ordinary trading lints— Hi; ils direclors with goods 'in the onlii'i ary course »f business, and wlm, the rnonllilj account is discharge lContinued in next column.)

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