Acceptance of loan by a Company

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 August 2010 Dear sir

Can a pvt ltd co which is not a subsidiary of a public ltd co accept loan from any person other than the shareholders of the co?

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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04 August 2010 Yes. It can accept loan from any person other than the shareholders of the company. prohibition is only on invitation or acceptance of deposits from persons other than its members, directors or their relatives & invitation to the public to subscribe for any shares in, or debentures of, the company.

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Jayashree S Iyer

Jayashree S Iyer (Expert)
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07 December 2010 Loan can be taken from another company. But any loan taken by a private company from persons other than director, relative of director or member will amount to deposit attracting Companies Acceptance of Deposit Rules, 1975.

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sivadas chettoor

sivadas chettoor (Expert)
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11 January 2011 In law there is a difference between "loan" and a "deposit". You can accept "loan" without attracting provisions of Section 58A of the Companies Act 1956. I have written an article years back in "SEBI AND CORPORATE LAWS" published by Taxmann about Loan V Deposit. You can search "SIVADAS CHETTOOR" in google and you may get the aricle. Please go through it if you wish to know more about the law in this respect.

siva208@yahoo.com