Loan from Individual and becomes shareholder later

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This discussion addresses two urgent queries regarding loans received by a private limited company from an individual, Mr. X. The first concerns correcting a 2019-20 loan initially misfiled as from a director, to be repaid directly to Mr. X in 2020-21. The second query deals with a new loan from Mr. X in May 2020, who subsequently became a shareholder in November 2020, and how to manage repayment and interest alongside his shareholding. Advice suggests correcting past errors and potentially treating the second loan as a deposit attracting penalties.

Kamal Pal

Kamal Pal (Querist)
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30 March 2021 Respected Members,

I have an urgent query on Loan from individual in to private limited company, request you to please reply to these queries: -

1. Loan received from Mr. X in 2019-20 and filed instead as a loan from director (Mr. Y) to company, later at the stage to repayment realized that payments have to be released directly to the Mr. X. Please advice how to pass correction here and pay directly to the Mr. X in year 2020-21.

2. loan received again in May 2020 from Mr. X in 2020-21 and made him shareholder too in Nov 2020 then how will we treat both the loan while paying in year 2020-21 along with Interest payment.

Please reply as soon as possible.