Loan from employee

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Querist : Anonymous

Querist : Anonymous (Querist)

03 December 2016 Dear Experts
Pls let me know weather A pvt. Ltd. Companies can accept the loan from employee ( general Manager) if yes what's the procedure.

Thanks & Regards
Anshul Gupta

CA. Vinodh Kothari

CA. Vinodh Kothari (Expert)
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03 December 2016 A private limited company cannot obtain loan from outsiders or from employee. It can take loan only from Banks, Directors, Directors relative.

VK

Saket Agarwal

Saket Agarwal (Expert)
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04 December 2016 As per Section 72(2) read with Rule 2(1)(x) of Companies (Acceptance of Deposits) Rules 2014:
"any amount received from an employee of the company not exceeding his annual salary under a contract of employment with the company in the nature of non-interest bearing security deposit" will not be considered a deposit. Other than the above, any other loan from an employee will be treated as a deposit.

It is not that loan from an employee is prohibited. Just that it will be treated as a deposit if it does not fall within the above rule. Once it is treated as a deposit there are lot of compliance issues and because of which it is generally not economical to accept a loan which is being treated as a deposit.

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