Reimbursement of Travelling Expenses to Directors

Company wishing to reimburse travelling expenses of its directors incurred in relation to business of the company has to comply with certain procedures which are explained hereunder:
Check Article of Association (AOA)
At the very outset company has to see whether AOA authorise the company to reimburse travelling expenses to the directors of the company. If AOA does not so authorise, AOA has to be altered accordingly by complete proceedings.
Convene a Board Meeting
A Board Meeting is to be convened after issuing notices to the directors of the Company unless already a Board Resolution has been passed to make such reimbursement.
Every officer of the company whose duty is to give notice of the Board meeting as aforesaid and who is in default will be punishable with fine of upto Rs. 1000.
Pass a resolution
In Board Meeting, pass a resolution allowing the Board to reimburse the travelling expenses to directors.
Expenses reimbursed
Only the actual expenses incurred by the directors in attending Board Meeting or Committees thereof or General Meetings of the company or in connection with the business of the company are reimbursed and not other expenses.
Time of Payment
Payment has to be made only after passing of the Board Resolution and not before that.
Payment to NRI Director
Company can also make payment to a person resident outside India who has been appointed as a non-whole-time director of the said company and who is on a visit to India for the company’s work, in rupees towards travel expenses to and from and without India. RBI has granted general powers to an Indian Company to act accordingly.