Loan to Director by a private Ltd Co

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Querist : Anonymous

Querist : Anonymous (Querist)

06 March 2010 Can a Private limited company can give loan to its Director or his Proprietorship Firm. Paid Up Capital 28 Lakhs, Reserve & Surplus (Premium) 248 lakh, Willing to Provide loan of 100 Lakh to its Director or his proprietorship firm for 1 year period

Jagruti (CS)

Jagruti (CS) (Expert)
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06 March 2010 Yes you can provide the loan to Director or relatives of directors. Just you have to Comply with the section 299 that i.e. you have to get Board Approval for the same and update in register u/s 301(1)

Message likes : 1 times

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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06 March 2010 AGREE

Ankur Garg

Ankur Garg (Expert)
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06 March 2010 The most important point skipped from first reply.

Yes you can give loan to director u/s 295 but you have to obtain prior approval of central govt.

Disclosure u/s 299 from director is necessary and he can not participate or vote in the meeting u/s 300.

Also register u/s 301 needs to be updated.

Regards

CA Prashant Gupta

CA Prashant Gupta (Expert)
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07 March 2010 I must say first reply of Jagruti (CS) is correct. No need for Central Govt permission (as mentioned by Mr. Ankur Garg). As this is a pvt company and u/s 295(2) it is mentioned that it is not applicable on pvt company so only board approval is OK.

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