Accepting of loan from public

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LLPs can accept loans and deposits from their partners, as permitted by Section 66 of the LLP Act. They can also secure loans and, since June 2019, take loans under the ECB scheme. However, LLPs generally cannot accept loans or deposits from the wider public, as these would be considered unregulated deposits. Intercorporate loans require board and shareholder approval, but loans from firm partners are generally unrestricted.

SHYAM KRISHNAN K

SHYAM KRISHNAN K (Querist)

14 May 2022 Is there any restriction on llp for accepting loan from public.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

14 May 2022 LLP can take loan or deposits from its partners as the same is permitted under section 66 of LLP act.

LLP can take secured loan. This is an inference drawn from reading section 66 of LLP Act. From June 2019,
LLP can take loan under ECB scheme as per circular issued by RBI. Please see RBI Master Direction No.5/2018-19 March 26, 2019.
All other unsecured loans or deposits, if taken by LLP from friends and family members, becomes unregulated deposits.
LLP can't accept loan or deposits from public like private companies.

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SHYAM KRISHNAN K

SHYAM KRISHNAN K (Querist)

15 May 2022 Is there any restriction on intercorporate loan.
Eg. A is a private limited company and a share holder of company B. A provided some amount to B as loan. Is there any restriction on these payment. Also requested to clarify that, restriction on payment of loan to firms if the company have a partner of the firm.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

15 May 2022 A company only after getting consent and approval of the Board as well as shareholders entitles to provide an inter-corporate loans to another company or body corporate.
No restrictions on loan taken from partners of firm.

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