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Loan to director

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08 December 2016 A private Company having only individual as subscriber and no loan from bank or financial institution , only one director has given loan

1. Paid up Share capital Rs.1,00,000/- and surplus reserve of Rs. 9,34,000/- as on 31.03.2016 has given
(1) loan of Rs.10,35,000/- to its one of Director appearing under short term loans and Advances under asset side
(2) under other current asset , current balance of A director is appearing for RS. 22,20,495/- and for another director for Rs. 11,500/-

whether above is allowed under Section 185 ?

08 December 2016 No, all the three amounts are in contravention of provision of section 185 of the Company Law. There are some exceptions in which loan or advance could be given to directors. Since, detail of business of the Company or status of directors or the scheme of loan to employees and nature of advance to other directors etc. are not available, no comment is made from this angle. Please read the relevant section carefully.

08 December 2016 I am talking about exemption given to Pvt. Ltd. vide circular No. 4/2015 dated 10/03/2015
whether as per this circular exemption is available to director of private company or not




08 December 2016 Circular clarifies the position on loans to the employees other than Whole time directors and MD. It is why I wrote that I was not able to comment as complete info. not available

08 December 2016 When did the Company give Rs 10,35,000 to the Director? I could not understand the transaction mentioned in your second point.

The exemption to Pvt Company came on 05th June, 2015. So, if a Company has given loan to Director after this date and all the conditions are satisfied as mentioned in notification, then there are not contravention at all. Kindly confirm the date and check the conditions given in notification dated 05th June, 2015.

09 December 2016 Thank you , actually this is Directors Account with the Company from which he is withdrawing , the balance of this account is debit or credit as per amount given to the Company or withdrawn from the company , as on 31.03.2016 it seems that Director has withdrawn from Company.

09 December 2016 What type of account he is having with a Company? is he a Creditor of Company?



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