loan taken from director

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sarvesh kumar (Querist)
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09 July 2010 i am a promoter, Director & Shareholder of a private ltd company. I have shares of Rs 400 Lacs in my personal capacity. i am planning to pledge these shares to one FInancial Institution & take loan against these shares. now i have two option.
option-1
i take the loan from Institution in my name and then give the same loan to my comp. comp will pay interest to me on such loan. can i charge interest at rate which is higher than the rate at which i am paying interest to financial Institution.

Option-2
I take the loan directly into company's name.

which option is more convenient

Ankur Garg

Ankur Garg (Expert)
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09 July 2010 Hi,

A private company can take loan from its directors. According to me you should go for option-II to avoid any prima facie liability.

Loan should be in company's name for better transparency. According to me the same is quite convenient from the administrative point of view.

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