Loan to employees and directors relative

This query is : Resolved

HEENA RAWAT (Querist)
Follow

09 July 2015 whether a company recover loan amount from its employees in cash or can adjust the amount of loan from thier salaries.
can employee paid his loan by bearing expenses of company?

if company paid loan to relative of one of directors then what are the possible ways to recover the loan from them????

Ankur Garg

Ankur Garg (Expert)
Follow

12 July 2015 Hi,

Best way of recovering loan from employees is to recover from their salaries to avoid any kind of audit issue. Cash mode should be avoided.

Further payment of loan to relative of director is equal to loan to director and prohibited under section 185.

Thanks

Message likes : 1 times

HEENA RAWAT

HEENA RAWAT (Querist)
Follow

20 July 2015 is section 185 applicable to private limited companies??????????

Ankur Garg

Ankur Garg (Expert)
Follow

20 July 2015 No. But subject to few condition.

Section 185 is applicable on a private company. However, recently private companies are exempted from section 185 subject to certain conditions as listed below.

Section 185 Shall not apply to a private company –

(a) in whose share capital no other body corporate has invested any money;

(b) if the borrowings of such a company from banks or financial institutions or any body corporate is less than twice of its paid up share capital or fifty crore rupees, whichever is lower; and

(c) such a company has no default in repayment of such borrowings subsisting at the time of making transactions under this section.

Thanks

HEENA RAWAT

HEENA RAWAT (Querist)
Follow

20 July 2015 if all these conditions are fulfilled then can a co. provide loan to the relatives of directors ?

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now