Loan to company

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Parashar (Querist)
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27 July 2010 A director of a public company has taken loan from a bank ask the bank to draw cheque in the name of the company. now company is paying installments and interest to the bank.

Is there any violation of law either companies act, or any other if so how can we make it good.

Thanx

Jagruti (CS)

Jagruti (CS) (Expert)
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27 July 2010 Yes there is a violation of Section 295 as Company is giving indirect loan to Director.

As this require prior approval of Central Govt.

You can make it gud by Compunding.

Message likes : 1 times

Parashar

Parashar (Querist)
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27 July 2010 Thanx but if I explain it more, the amount is being used by the company only and not by the director, moreover it is against the property of the director but the bank has not created any charge with roc

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