Loans from Non members for Pvt Ltd. co

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Anar (Querist)
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19 February 2011 Dear all,

Whether a Pvt Ltd Co. can accept Loans from other than directors, shareholders or any corporate entity?

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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20 February 2011 A public and private limited company can take loan from other company and body corporate and the same would be covered under section 372A as an inter corporate loan. The above is exempt from the deposit rules, 1975.

A public and private company can also take loan from Banks/PFIs under the same section 372A as an inter corporate loan.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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20 February 2011 A private limited company can take unsecured loan from its shareholders, directors and their relatives and the same would not be covered under section 58A and other deposit provisions as such transaction is exempt by deposit rules 1975.

But if a private company take unsecured loans from persons other than its shareholders, directors and their relatives the same would be considered as a violation of section 3(1)(iii) of the Companies Act, 1956.

Jayashree S Iyer

Jayashree S Iyer (Expert)
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21 February 2011 A company can accept loans from other corporate entity and the same would be subject to rules specified in Section 372A governing inter corporate loans.

Loans from non-members, non-directors and their relatives would be considered a deposit attracting provisions of Section 58A.

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