Nikunj Shiyani
(Executive)
(124 Points)
Replied 10 July 2016
Mohit Batra
(CS Professional Passed)
(101 Points)
Replied 11 July 2016
A Private Company can give loans to its directors and assosiate Companies as provisions of Section 185 are not applicable to a Private Company under section 462 and vide exemption notification of MCA dated 5 June 2015 .
Loan to director are allowed for Private Limited Companies if its fulfill the below mentioned conditions:
1. Body Corporate should not be Shareholder
2. Not borrowed money from Bank/ Financial Institution/ Body Corporate exceeding lower of the following:-
i. Twice its Paid up capital
ii. Rs. 50 Crores
3. No repayment default subsisting of such borrowings at time of giving loan
Note:
Giving of loans/ guarantee/security to Group Companies now possible.
Pratik Shah
(Practising Company Secretary)
(4432 Points)
Replied 11 July 2016
You will need to check Section 185 and Section 186 about its applicability. Please also check rules.
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