LOAN taken by Co. from Joint shareholder
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
10 January 2010
Can a Pvt Co. take a loan from Joint shareholdeR?
A Pvt Co:
prohibits any invitation to or acceptance of deposits from person other than its members, directors or their relatives.
Relatives of only directors or relatives of both members and directors
A Pvt Co:
prohibits any invitation to or acceptance of deposits from person other than its members, directors or their relatives.
Relatives of only directors or relatives of both members and directors
11 January 2010
YES.
Loan taken by pvt. co. from members is exempt from the definition of deposit by the deposit rules, 1975.
Regards
Loan taken by pvt. co. from members is exempt from the definition of deposit by the deposit rules, 1975.
Regards
Querist : Anonymous
Querist :
Anonymous
(Querist)
19 January 2010
Relatives of only directors or relatives of both members and directors ?????
03 August 2024
A private company can indeed take a loan from its shareholders, including joint shareholders, subject to compliance with the relevant provisions of the Companies Act, 2013. Here’s a detailed explanation of how loans from shareholders are treated under the law, specifically focusing on the types of shareholders and their relatives:
### **Loan from Shareholders**
#### **1. Private Company Provisions:**
- **Section 73 of the Companies Act, 2013:** This section restricts a private company from inviting or accepting deposits from the public. However, it allows private companies to accept deposits from its members, directors, or their relatives. Therefore, a private company can accept loans from its shareholders and their relatives.
- **Section 180 (1)(c):** For taking loans, if the amount exceeds the limits prescribed under this section, the company needs to pass a special resolution.
#### **2. Types of Shareholders:**
- **Individual Shareholders:** A private company can take a loan from its individual shareholders, including joint shareholders (where shares are held jointly by more than one person).
- **Corporate Shareholders:** A private company can also take loans from other corporate entities, provided they are not considered public deposits.
#### **3. Relatives of Directors and Shareholders:**
- **Definition of Relatives:** According to Section 2(77) of the Companies Act, 2013, the term "relative" includes spouses, parents, children, siblings, and their respective spouses.
- **Loan from Relatives:** The company can accept loans from relatives of its directors or shareholders. The term "relative" extends to the relatives of both members and directors.
### **Important Compliance Points:**
1. **Board Resolution:** Ensure that the loan transaction is authorized by a board resolution, especially if the loan amount is significant.
2. **Disclosure in Financial Statements:** The loan must be disclosed in the financial statements of the company.
3. **No Invitation to Public:** The private company must not invite or accept deposits from the public outside the scope of its shareholders, directors, or their relatives.
4. **Documentation:** Maintain proper documentation of the loan agreement, including the terms of the loan, interest rate (if any), and repayment schedule.
### **Specific Situations:**
- **Loan from Joint Shareholders:** If the loan is provided by shareholders who hold shares jointly, the company should ensure that the loan agreement specifies the names of all joint shareholders who are providing the loan.
- **Interest-Free Loans:** If the loan is interest-free, it must still be properly documented and reported in compliance with the Companies Act. Although interest-free loans are permissible, they should be disclosed appropriately.
### **Summary:**
- **Yes**, a private company can take a loan from its shareholders, including joint shareholders.
- **Relatives:** Loans can also be accepted from relatives of both directors and shareholders, as defined under the Companies Act.
- **Compliance:** Ensure all legal and regulatory requirements are met, including proper documentation, board resolutions, and financial disclosures.
For specific advice tailored to your company's situation, consulting a company secretary or legal expert is recommended to ensure all regulatory requirements are thoroughly addressed.
### **Loan from Shareholders**
#### **1. Private Company Provisions:**
- **Section 73 of the Companies Act, 2013:** This section restricts a private company from inviting or accepting deposits from the public. However, it allows private companies to accept deposits from its members, directors, or their relatives. Therefore, a private company can accept loans from its shareholders and their relatives.
- **Section 180 (1)(c):** For taking loans, if the amount exceeds the limits prescribed under this section, the company needs to pass a special resolution.
#### **2. Types of Shareholders:**
- **Individual Shareholders:** A private company can take a loan from its individual shareholders, including joint shareholders (where shares are held jointly by more than one person).
- **Corporate Shareholders:** A private company can also take loans from other corporate entities, provided they are not considered public deposits.
#### **3. Relatives of Directors and Shareholders:**
- **Definition of Relatives:** According to Section 2(77) of the Companies Act, 2013, the term "relative" includes spouses, parents, children, siblings, and their respective spouses.
- **Loan from Relatives:** The company can accept loans from relatives of its directors or shareholders. The term "relative" extends to the relatives of both members and directors.
### **Important Compliance Points:**
1. **Board Resolution:** Ensure that the loan transaction is authorized by a board resolution, especially if the loan amount is significant.
2. **Disclosure in Financial Statements:** The loan must be disclosed in the financial statements of the company.
3. **No Invitation to Public:** The private company must not invite or accept deposits from the public outside the scope of its shareholders, directors, or their relatives.
4. **Documentation:** Maintain proper documentation of the loan agreement, including the terms of the loan, interest rate (if any), and repayment schedule.
### **Specific Situations:**
- **Loan from Joint Shareholders:** If the loan is provided by shareholders who hold shares jointly, the company should ensure that the loan agreement specifies the names of all joint shareholders who are providing the loan.
- **Interest-Free Loans:** If the loan is interest-free, it must still be properly documented and reported in compliance with the Companies Act. Although interest-free loans are permissible, they should be disclosed appropriately.
### **Summary:**
- **Yes**, a private company can take a loan from its shareholders, including joint shareholders.
- **Relatives:** Loans can also be accepted from relatives of both directors and shareholders, as defined under the Companies Act.
- **Compliance:** Ensure all legal and regulatory requirements are met, including proper documentation, board resolutions, and financial disclosures.
For specific advice tailored to your company's situation, consulting a company secretary or legal expert is recommended to ensure all regulatory requirements are thoroughly addressed.
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