Loan from relatives of director

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This query is : Resolved

Swaminathan (Querist)

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)

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)

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)

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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