Unsecrued loan
Querist : Anonymous
Querist : Anonymous
actually i refer section 297 & 299
but financial transactions r excluded
Querist : Anonymous
because since morning i m searching it...
---
### **Unsecured Loan from Directors & Relatives - Reporting under CARO**
* **CARO (Companies Auditor's Report Order), 2020**, Clause 4 relates to **loans, investments, guarantees, and securities** given by the company.
* **Clause 4(x)** specifically requires disclosure of loans and advances in the nature of loans to directors, related parties, etc.
* **Are unsecured loans from directors/relatives reported under Clause 4 of CARO?**
* **Yes**, if the company has taken unsecured loans from directors or their relatives, it **should be disclosed** in the CARO report under Clause 4.
* The reason is that these loans are financial transactions and form part of the company’s liabilities.
* **Exceptions under Section 297 & 299 (Companies Act, 1956, now replaced by CA, 2013)**:
* These sections regulate **related party transactions** but **financial transactions such as loans to directors or their relatives are not excluded**.
* So, Section 297 and 299 don't exclude loans to directors/relatives from being reported.
* **Therefore, auditor must disclose**:
* Details of unsecured loans from directors or their relatives in the CARO report.
---
### Summary:
| Query | Answer |
| --------------------------------------------------------------------------- | ----------------------------------------------- |
| Are unsecured loans from directors/relatives disclosed under CARO Clause 4? | **Yes** |
| Do Sections 297 & 299 exclude financial transactions like loans? | **No, financial transactions are not excluded** |
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If you want, I can share the exact wording of CARO Clause 4 or relevant sections of Companies Act for your reference. Would you like that?
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