Loan to company
This query is : Resolved
19 November 2013
Can a individual (unrelated party) give a loan to "PUBLIC COMPANY" as per the Companies Act, 1956?
19 November 2013
Yes, they can, but it will be treated as deposit.
19 November 2013
What are the implications/consequences if it is treated as deposit?
19 November 2013
Penalty for non-compliance
Whoever fails to comply with the provisions or fails to comply with any order of the Company Law Board/Tribunal shall be punishable with imprisonment upto three years and with fine upto Rs. 500 for every day of continuance of default. For any offence under the section, a director shall also be liable to be proceeded against and punished.
Section 58A(6)(b) make it clear that it does not contain a condition that prosecution of company is a sine qua non for prosecution of every officer of company who is in default though, no doubt, a finding that offence was committed by company is sine qua non for convicting every officer of company who is in default. Main requirement under section 58A is that there should be a finding that contravention was by company before officer could be convicted and it is not necessary that company itself should be prosecuted along with officers of company. If company was not prosecuted due to any legal impediments, officer of company could not on that score alone escape from penal liability as envisaged under section 58A(6)(b). [Rama Bhushanam v Registrar of Companies (2002) 36 SCL 344 (AP)].
Penalty for non-compliance
Whoever fails to comply with the provisions or fails to comply with any order of the Company Law Board/Tribunal shall be punishable with imprisonment upto three years and with fine upto Rs. 500 for every day of continuance of default. For any offence under the section, a director shall also be liable to be proceeded against and punished.
Section 58A(6)(b) make it clear that it does not contain a condition that prosecution of company is a sine qua non for prosecution of every officer of company who is in default though, no doubt, a finding that offence was committed by company is sine qua non for convicting every officer of company who is in default. Main requirement under section 58A is that there should be a finding that contravention was by company before officer could be convicted and it is not necessary that company itself should be prosecuted along with officers of company. If company was not prosecuted due to any legal impediments, officer of company could not on that score alone escape from penal liability as envisaged under section 58A(6)(b). [Rama Bhushanam v Registrar of Companies (2002) 36 SCL 344 (AP)].
19 November 2013
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