Company security

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Gopalakrishnan V (Querist)
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21 February 2022 Director of a Company has applied for a loan and is giving the land owned by a Company, in which he is a Director, as collateral for the loan He and his wife are the Directors of the Company. Is this allowed, kindly clarify.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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21 February 2022 Section 185(1) of the Companies Act, 2013 provides that no company directly or indirectly provide any Director of the Company or such other person in whom the Director is interested in the following:

Advance any loan; or
Any loan represented by a book debt; or
Give any guarantee; or
Provide any security in connection with any loan taken.

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