Unsecured loan

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

26 September 2012 if a private Limited company time to time takes loan form the Directors and other Body Corporates then whether it is required to pass every time a Board Reolution for the same specify the amoutn of loan and the name of the Body Corporate or the Company can pass a single resolution that company can borrow money from the directors and other body corpoartes as required by the company with mutual consent ?

and whether every year a resolution is required or only one single resolution at first time when loan is made can be made?

Kindly advice?

whether there is different provision for the same of the Public Limited Company?

Ajay Mishra

Ajay Mishra (Expert)
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26 September 2012 Hi

Please check the limit upto which board approve for taking loan from directors and if the loan is upto limit then no need to take further approval from Board.

1. Deposits in case of Private Limited Company

Private Company is prohibited to accept any invitation or acceptance of unsecured loans/deposits from the persons other than its members, directors or their relatives. Therefore a private company can accept deposits through private arrangement from its members, directors and their relatives.

Rule 2(b)(ix) exempt any unsecured loan money received from directors and shareholders from the definition of deposits. According to Rule 2(b)(ix), any amount received from members of a private company limited by guarantee are not exempt.

Ajay Mishra

Ajay Mishra (Expert)
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26 September 2012

2. Consequences of acceptance of deposit by Private Limited Company

If a private company acceptance an amount, which may be classified as deposit under section 58A read with Companies (Acceptance of Deposits) Rules, 1975, it will cease its status of a private company and has to make all the compliances for such deposits as per the requirement of said rules, as well as to comply with all the provisions as may be applicable on public limited company such as section 58A, 58AA, 58AAA, 81, 256, 257, 198, 268, 269, Schedule XIII, 274(i)(g), 295, 297, 300, 301, 372A, etc

Querist : Anonymous

Querist : Anonymous (Querist)

26 September 2012 Sir,

Kindly give me advice regarding the Board Resolution that is required at every time when the loan is taken or can be passed only one time ?

Ajay Mishra

Ajay Mishra (Expert)
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26 September 2012 Hi

The Board meeting will decide the amount up to which a company will take loan from directors or others. The Board resolution has effect up to the amount mentioned and as and when the limit cross you will be required to hold new board meeting for further loan.

No need to pass board resolution for every step of taking loan from director.

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