Deposits

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Rajeswar (Querist)

13 October 2009 A private limited company has accepted unsecured loans from the relatives of the shareholders.does it amount to violation of Sec 58A ans Sec. 3(1)(iii) of Cos. Act, 1956?

Ankur Garg

Ankur Garg (Expert)

13 October 2009 Hi,

LOAN FROM INDIVIDUALS/OUTSIDERS

Kindly appreciate, 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 take 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.

Regards

Ankur Garg

Ankur Garg (Expert)

13 October 2009 But the above exemption is not available to you because deposit rules exempts a private company when it accepts loan from relative of director.

But your company have accepted loan from the relatives of the shareholders. Hence in your company this amount would be treated as public deposit and against the Sec. 3(1)(iii) of Cos. Act. Be careful as it is a violation of Sec. 3(1)(iii) of Cos. Act.

Regards

Rajeswar

Rajeswar (Querist)

13 October 2009 Thanks for ur reply

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