Company law
This query is : Resolved
23 July 2013
Can co. give loan to anyone(Directors/others)
or can it accept loan from anyone?
or can it accept loan from anyone?
23 July 2013
Yes, co can give loan after fulfilling conditions mentioned in companies act.
23 July 2013
Loan to Directors and the Provisions of the Companies Act
Loans to the direcotors of the company given by the company are governed by section 295 of the companies act, 1956. Section 295 put restrictions on a public company or a private company being a subsidiary of a public company intending to make any type of transaction with a director of the company or partner or relative of a director, etc. whether, directly or indirectly to make any loan, or to give any guarantee, or to provide any security in connection with a loan made by any other person to, or to any other person by, and it calls for obtaining the previous approval of the Central Government. This section is applicable to a public company or a private company, which is a subsidiary of a public company.
Loans to the direcotors of the company given by the company are governed by section 295 of the companies act, 1956. Section 295 put restrictions on a public company or a private company being a subsidiary of a public company intending to make any type of transaction with a director of the company or partner or relative of a director, etc. whether, directly or indirectly to make any loan, or to give any guarantee, or to provide any security in connection with a loan made by any other person to, or to any other person by, and it calls for obtaining the previous approval of the Central Government. This section is applicable to a public company or a private company, which is a subsidiary of a public company.
23 July 2013
In case of loan given by Pvt Ltd company to its directors/relatives one should be aware of the provisions of Section 2(22)(e).
If such director or relative to whom loan has been given by the Private Limited Company, hold 10% or more share in the company than provisions of section 2(22)(e) will be attracted and such loan will be treated as deemed dividend covered under section 2(22)(e) and will be taxable in the hands of shareholders.
If such director or relative to whom loan has been given by the Private Limited Company, hold 10% or more share in the company than provisions of section 2(22)(e) will be attracted and such loan will be treated as deemed dividend covered under section 2(22)(e) and will be taxable in the hands of shareholders.
23 July 2013
As per section 3(1)(iii)(d) of the Companies Act, 1956 a Pvt. Limited Company is prohibited from inviting or accepting deposits from persons other then its members, directors or their relatives.
A private limited company can take unsecured loan from its shareholders, directors and their relatives and the same would not be covered under section 58A and other deposit provisions as such transaction is exempt by deposit rules 1975.
But if a private company takes unsecured loans from persons other than its shareholders, directors and their relatives the same would be considered as deposit under section 58A read with Companies (Acceptance of Public Deposit) Rules, 1975.
Further private limited company can take loan from other company and body corporate and the same would be covered under section 372A as an inter corporate loan. The above is exempt from the deposit rules, 1975.
It can also take loan from Banks/PFIs under the same section 372A as an inter-corporate loan.
For details see the exemptions from the ambit of deposit given in "Companies (Acceptance of Deposits) Rules, 1975" from the link given below---
https://www.mca.gov.in/Ministry/actsbills/rules/CAoDR1975.pdf
A private limited company can take unsecured loan from its shareholders, directors and their relatives and the same would not be covered under section 58A and other deposit provisions as such transaction is exempt by deposit rules 1975.
But if a private company takes unsecured loans from persons other than its shareholders, directors and their relatives the same would be considered as deposit under section 58A read with Companies (Acceptance of Public Deposit) Rules, 1975.
Further private limited company can take loan from other company and body corporate and the same would be covered under section 372A as an inter corporate loan. The above is exempt from the deposit rules, 1975.
It can also take loan from Banks/PFIs under the same section 372A as an inter-corporate loan.
For details see the exemptions from the ambit of deposit given in "Companies (Acceptance of Deposits) Rules, 1975" from the link given below---
https://www.mca.gov.in/Ministry/actsbills/rules/CAoDR1975.pdf
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Section 54F - Exemption on LTCG in 2026 for HP purchased in 2023
- STCG....................................................
- TAN for Partnership
- AMOUNT RECEIVED UNDER COMPULOSRY ACQUISITION OF AGRICULTURAL LAND
- Sales return eway bill
- Taxation on LTCG for property sold after 24JUL2024
- AY 26-27 ITR-4 FILING U/S 44-ADA
- Plot of land. Cost of Acquisition
- LTCG for Assmt year 26-27
- REGARDING GST LIABILITY/....
- Free lancer income
- Long Term Service award taxability in hands of company
- Standard Deduction claim for EPFO Pension and ICICI Prudential Life Annuity
- Sales amount in Gstr1
- CG after sale of flat
- E Commerce GSTR1 & 3B how to file
- Nomination of Bank for refund in itr 2
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
- GST Refund_RFD-01
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
