Loans to private company [Resolved]

This query is : Resolved

k.c. palai (Querist)

25 June 2014 Dear Learned Members,
Mr. A is a relative of a Director of a Private Company, PQR Pvt Ltd. Mr. A has given a loan of Rs. 1 Crore to the Company at different dates but all before 1st April, 2014. As per the Companies Act, 2013 all loans given by a Shareholder or a relative of a director to a Private Limited Company before 1st April, 2014 would now be treated as deposits and has to be repaid back within 1 year from the date of the commencement of the act (i.e., 1st April, 2014) or the due date of the loan whichever is earlier.

Mr. A is now appointed as a director of PQR Pvt Ltd (post 01.04.2014) and as a director gives a loan to the Company of Rs. 2 Crore by which the Company repay his amount of Rs. 1 croreback to him for the loans taken previously from him (now being treated as deposits).

Request you to guide me whether such arrangement is possible.

Thanks & Regards,
K C Palai

CA. Amit G. Chandani

CA. Amit G. Chandani (Expert)

25 June 2014 This type of arrangement can be done. But, loan accepted before 01.04.2014 will still be treated as deposit. You need to file DPT-4 (Note that there is drafting error in Section 74) but on a safer side file DPT-4 before 30.6.14.
Loan from director will be exempted from deposit definition if a declaration has been taken form director that the loan advanced is of owned fund.

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