Loan from relatives of director

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Swaminathan (Querist)
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06 February 2018 Can a private limited company accept loan from relatives of director.

Also, the can the loan amount exceed the authorized capital of the company ?

CS Mitesh Mehta

CS Mitesh Mehta (Expert)
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14 February 2018 No. amounts received from relatives of directors are deposits even for a private company and if received would be in contravention of the Companies Act 2013.

Swaminathan

Swaminathan (Querist)
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14 February 2018 But Sir, as per amendment Companies (Acceptance of Deposits) Second Amendment Rules, 2015 dated 15/09/2015 it says that amount received from relatives of directors is excluded from deposits and I also found the same amendment made in Rule 2(Definitions) under Chapter V The Companies (Acceptance of Deposits) Rules, 2014.

Kindly tell Whether it is correct or not.

CS Mitesh Mehta

CS Mitesh Mehta (Expert)
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15 February 2018 yes but subject to condition that if the relative of directors give the amount out of his own sources and not borrowed funds and give a certificate to that effect to the company.

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