Unsecured Loan

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Manasa Ranjan Samal (Querist)
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09 July 2010 Dear Sir,
kindly clarify the following problems,
1) Can a Private Limited Comapany give unsecured loan to a proprietorship firm? If yes, whether the firm will repay the loan within the current year or the firm can repay in next year also?

Akhil Agrawal

Akhil Agrawal (Expert)
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09 July 2010 Yes a Pvt Ltd Co. can give loan to a Firm. thereis as such no need to repay it in same yr. ALso also see sec 2(22)(e) of the Income Tax Act.

Srikant

Srikant (Expert)
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09 July 2010 Companies Act, 1956 so far has been liberal to the Private Limited Companies.

So a Pvt Ltd Co can give / take loan (unsecured/ secured) to /from a Proprietorship /Partnership Firm / Company.

Company Law is also silent about the period of Repayment of interest and or Principal.

So A Pvt. Ltd. Co, can arrange its fund as per its suitability.

I think You are asking from CARO point of View.

If your query is related to CARO, then in Audit Report you can simply mention that whether the Co has taken any loan or not and if yes then whether the terms and conditions of such loan and repayment thereof are prejudicial to the interest of the Company.

Other Formalities in this regard are,
Disclosure of Interest of Directors.

You can refer Sec 299,297,301,372A for your personal knowledge.

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