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loan to directors

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Querist : Anonymous

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Querist : Anonymous (Querist)
15 December 2010 Can a Private Ltd. Co. can give a loan to directors??if yes, upto what amount??can it be interest free loan??
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CA Navin Jain

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CA Navin Jain (Expert)
15 December 2010 There is no restriction on a private company to give loans (even interest free) to directors. But the same will be deemed as dividend in the hands of director to the extent of accumulated profits of the company as on the date of giving loan.
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Jayashree S Iyer

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Jayashree S Iyer (Expert)
15 December 2010 Section 295 is not applicable to private companies. Hence there is no restriction in private companies making loan to its directors.
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