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Loan in the case of company

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Querist : Anonymous

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Querist : Anonymous (Querist)
22 September 2011 Whether a company can take or give loan to or from third person,any other company or from any other firm
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CA Siddhartha Bhardwaj

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CA Siddhartha Bhardwaj (Expert)
22 September 2011 If the company is a private company, it can give or take loans without any restrictions.

However, if it is a public company, the provisions of Section 372A shall be applicable and the company can give loans only upto minimum of the following:

60% of(Paid up share capital+Free Reserves)
100% of free reserves.

Other provisions are also applicable, such as unanimous approval of BOD.
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