SECURED or UNSECURED LOAN from an INDIVIDUAL

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Saurabh Jindal (Querist)
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11 July 2009 Hi Experts!

Plz tell me whether a public limited company can take a SECURED or UNSECURED LOAN from an INDIVIDUAL( e.g.- Mr. X)

Plz tell me the Appropriate Section as per Companies Act

ITS URGENT.

CA Tilak Raj Sharma

CA Tilak Raj Sharma (Expert)
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11 July 2009 Yes, there is no such restriction on taking loan from Individual.

For Loan more than Rs. 20,000 you need to make all transactions by account payee cheques (no cash/bearer cheques)otherwise it will be treated as income under the IT Act. (Section 269T & 269SS)

Ankur Garg

Ankur Garg (Expert)
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11 July 2009 Hello Saurabh,

If a public limited company take a SECURED or UNSECURED LOAN from an INDIVIDUAL the same shall be treated as Deposit under section 58A read with Companies (Acceptance of Public Deposit) Rules, 1975 and you have to fulfill the requirement of acceptance of deposit.

Reason being the same transaction is not covered in the list of exampted deposit inder rule 2 of Companies (Acceptance of Public Deposit) Rules, 1975.

Regards

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