Loan to director

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Arun Kumar (Querist)

01 August 2015 Hi

Can anyone tell me the provisions related to loan that, can a Pvt Ltd Company give to its Directors. As far as i know as per Sec 185 of Comp Act 2013, there i found some restriction, but one of my client has given a loan from the company fund to its director. How far is it valid..?

Pratik Shah

Pratik Shah (Expert)

01 August 2015 If your client has given loan to Director before commencement of Section 185 of Companies Act2013, then it is fine, because it was not applicable to pvt. ltd co. earlier.

But if the Company has given loan to Director after commencement of this section, then it is non-compliance.

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Ankur Garg

Ankur Garg (Expert)

01 August 2015 Agree with expert opinion. Now section 185 restricts loan to directors.

Thanks

Arun Kumar

Arun Kumar (Querist)

02 August 2015 Thanks all for you valuable reply. But my client has given the loan after commencement of this act. My question is, can i show it as any other heading instead of Loan to Director in the books..?

Pratik Shah

Pratik Shah (Expert)

02 August 2015 No..It is clearly a non-compliance.

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