Loan from proprietary concern of director

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This query is : Resolved

Devendra (Querist)

03 November 2016 Dear Members,

M/s XYZ Ltd. has accepted a Loan from M/s ABC whose proprietor is Mr. A. Can M/s XYZ Ltd. accept such loan?

Please guide.

Thank you,

Jatin Bajaj

Jatin Bajaj (Expert)

03 November 2016 According to section 179 , Read with Rule 8 of Meeting of Board of Power Rules, XYZ Ltd can borrow the money from M/s ABC just by passing the Board Resolution in the Board Meeting.
Company has to file form MGT 14 with ROC within 30 days of passing Board Resolution
Condition : The money borrowed shall not exceed the paid up share capital and free reserves of the Company
But if it exceeds the agregate of paid up share capital and free reserves then as per section 180 Company needs to pass special resolution in General Meeting.
Company needs to file Form MGT 14 within 30 days of passing special resolution.
Attachment :
certified copy of special resolution passed at the meeting of the members.

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