Loan from directors
This query is : Resolved
BHUVANESH N
(Querist)
06 February 2018
Can a private limited company take an interest free loan from the Director as per the Companies Act, 2013???
Please clarify.
Please clarify.
CS Mitesh Mehta
(Expert)
07 February 2018
Amounts received from directors are loans and not deposits if the directors give the amount out of his
own sources and not borrowed funds and give a certificate to that effect to the company. In such a case
a company may accept loans from directors without interest too.
However, if the director gives the money out of borrowed funds, it would be deposit and provisions of
section 76 read with Companies (Acceptance of Deposit) Rules 2014 would be applicable and only
eligible companies can take such a deposit within the specified limits. An Eligible Company is a
Public Company which has either minimum Net-Worth of Rs. 100 crores or Turnover of Rs. 50
Crores. A private company cannot accept such loan from the director.
In such a case if the director is a shareholder also then, section 73 (2) read with Companies
(Acceptance of Deposit) Rules 2014 would be applicable and it would be treated as deposit from
shareholder
own sources and not borrowed funds and give a certificate to that effect to the company. In such a case
a company may accept loans from directors without interest too.
However, if the director gives the money out of borrowed funds, it would be deposit and provisions of
section 76 read with Companies (Acceptance of Deposit) Rules 2014 would be applicable and only
eligible companies can take such a deposit within the specified limits. An Eligible Company is a
Public Company which has either minimum Net-Worth of Rs. 100 crores or Turnover of Rs. 50
Crores. A private company cannot accept such loan from the director.
In such a case if the director is a shareholder also then, section 73 (2) read with Companies
(Acceptance of Deposit) Rules 2014 would be applicable and it would be treated as deposit from
shareholder
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