Unsecrued loan

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 August 2012 can any one help me.... i wan to know whether unsecured loan taken from directors and director's relative is reported under clause 4 of CARO......???

CA Navin Jain

CA Navin Jain (Expert)
Follow

10 August 2012 Yes, disclosed under Caro.

Querist : Anonymous

Querist : Anonymous (Querist)

10 August 2012 no

actually i refer section 297 & 299

but financial transactions r excluded

Querist : Anonymous

Querist : Anonymous (Querist)

10 August 2012 Sir if u have some text which indicate such than pls tell me

because since morning i m searching it...

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
Follow

02 August 2025 Great question! Here’s the clarification regarding **unsecured loans from directors and their relatives and their disclosure under CARO**:

---

### **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** |

---

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?

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now