I m working for a Private company and we have 4 Directors whereby one of our senior Director has taken loan against showroom property in his individual name. Property is also in his name. however, the repayment of loan is made by our company through Bank chqs.
Kindly advice me as what legal compliance i should follow and what should be the treatment for such transactions in the books.
16 July 2013
In this case, this transaction is simply a loan to the Director by the co.
Section 295 provides restriction to give loan to a director, but this section is not applicable to a private limited co.To my understanding sec 297 is also not applicable here.
So, to my understanding,a pvt. Ltd. Co is free to provide loan to a director subject to passing a board resolution in a duly convened board meeting.
CAclubindia
