Unsecured loan and interest thereon

This query is : Resolved

G. Sreedhar (Querist)
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24 March 2015 CAN A DIRECTOR OF THE PRIVATE LIMITED COMPANY GIVE UNSECURED LOAN TO THE COMPANY.

IF SO, CAN THE COMPANY PAY INTEREST TO THIS LOAN.

CA CS Sweta Solanki

CA CS Sweta Solanki (Expert)
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24 March 2015 Yes of course.
Read following:
Section 73: It states that No company whether public or private can accept deposit from anybody without complying with the provisions mentioned in Section 73. Clause (viii) of Rule 2(c) specifically excludes loans from directors from the purview of deposit definition if the director gives a declaration that the amount he is lending is not out of borrowed funds.

To sum up any company whether public or private can accept loan or deposit from directors (subject to obtaining a declaration).

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