Unsecured loan
This query is : Resolved
Girish Vyas
(Querist)
12 September 2011
CAN ANY ONE HELP ..CAN a PVT lTD COM. TAKE LOAN FRON OTHER PVT LTD COM.
12 September 2011
Yes it can take loan from other pvt ltd company without any problem.
Girish Vyas
(Querist)
13 September 2011
Kindly Sir ,plz provide me The Notification Or Section under which The company can Take loan fron other company
02 August 2025
Sure! Here’s the legal basis and relevant provisions for a **Private Limited Company (Pvt Ltd) taking a loan from another Private Limited Company** under Indian law:
---
### Can a Pvt Ltd company take loan from another Pvt Ltd company?
* **Yes, a Pvt Ltd company can take a loan from another Pvt Ltd company**, subject to compliance with provisions of the Companies Act, 2013 and other applicable laws.
---
### Relevant Provisions & Sections:
1. **Companies Act, 2013:**
* **Section 185**:
Deals with **loan to directors and related persons** — restricts loans to directors and their relatives unless in compliance with conditions.
(If the loan is between two companies and no director is involved as a related party, then Section 185 may not be triggered.)
* **Section 186**:
This is the **most important provision governing loans and investments by companies**.
* A company can give loans or make investments up to certain prescribed limits (typically 60% of paid-up share capital, free reserves, and securities premium or 100% of free reserves and securities premium, whichever is higher) without prior approval by the shareholders.
* If the loan amount exceeds prescribed limits, **prior approval of shareholders by special resolution** is required.
* The company must disclose such loans and investments in its financial statements.
2. **Indian Contract Act, 1872:**
* Governs the contract between the two companies for the loan agreement (terms, interest, repayment, etc.).
3. **Income Tax Act, 1961:**
* Interest income on loan is taxable to the lending company.
* TDS may be applicable on interest payments as per Income Tax rules.
---
### Summary:
| Aspect | Details |
| ------------------------------ | --------------------------------------------------------------- |
| Is loan allowed? | Yes, Pvt Ltd company can take loan from another Pvt Ltd company |
| Key Compliance | Section 186 (Loans & investments by companies) |
| Approval | Shareholder approval required if loan exceeds prescribed limits |
| Disclosure | Loan details to be disclosed in financial statements |
| Restrictions under Section 185 | If loan to directors/related parties, conditions apply |
---
### Where to find the exact text?
* **Section 186, Companies Act 2013** — [Link to Ministry of Corporate Affairs website](https://www.mca.gov.in/)
* MCA Notification on rules relating to loans and investments.
---
If you want, I can help draft a basic loan agreement format or guide you on the filing process for disclosures. Let me know!
---
### Can a Pvt Ltd company take loan from another Pvt Ltd company?
* **Yes, a Pvt Ltd company can take a loan from another Pvt Ltd company**, subject to compliance with provisions of the Companies Act, 2013 and other applicable laws.
---
### Relevant Provisions & Sections:
1. **Companies Act, 2013:**
* **Section 185**:
Deals with **loan to directors and related persons** — restricts loans to directors and their relatives unless in compliance with conditions.
(If the loan is between two companies and no director is involved as a related party, then Section 185 may not be triggered.)
* **Section 186**:
This is the **most important provision governing loans and investments by companies**.
* A company can give loans or make investments up to certain prescribed limits (typically 60% of paid-up share capital, free reserves, and securities premium or 100% of free reserves and securities premium, whichever is higher) without prior approval by the shareholders.
* If the loan amount exceeds prescribed limits, **prior approval of shareholders by special resolution** is required.
* The company must disclose such loans and investments in its financial statements.
2. **Indian Contract Act, 1872:**
* Governs the contract between the two companies for the loan agreement (terms, interest, repayment, etc.).
3. **Income Tax Act, 1961:**
* Interest income on loan is taxable to the lending company.
* TDS may be applicable on interest payments as per Income Tax rules.
---
### Summary:
| Aspect | Details |
| ------------------------------ | --------------------------------------------------------------- |
| Is loan allowed? | Yes, Pvt Ltd company can take loan from another Pvt Ltd company |
| Key Compliance | Section 186 (Loans & investments by companies) |
| Approval | Shareholder approval required if loan exceeds prescribed limits |
| Disclosure | Loan details to be disclosed in financial statements |
| Restrictions under Section 185 | If loan to directors/related parties, conditions apply |
---
### Where to find the exact text?
* **Section 186, Companies Act 2013** — [Link to Ministry of Corporate Affairs website](https://www.mca.gov.in/)
* MCA Notification on rules relating to loans and investments.
---
If you want, I can help draft a basic loan agreement format or guide you on the filing process for disclosures. Let me know!
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