UNSECURED LOAN BY PRIVATE LIMITED COMPANY TO RELATED PARTIES

Save Share

This query is : Resolved

Quick Summary

Generally, a private limited company cannot issue unsecured loans to its directors, shareholders, or other related parties. However, there are specific exceptions. Loans are permitted if they are part of the director's employment conditions, approved by shareholders via a special resolution, or if providing loans is a core part of the company's business activities. While companies can receive loans from directors and shareholders, the reverse is typically restricted.

Hemkumar

Hemkumar

(Querist)
Follow

03 January 2024 Can a private limited company give unsecured loans to its directors and other related directors

RAJA P M

RAJA P M (Expert)
Follow

03 January 2024 No... Company can't give loan to directors, (Related Directors) Share holders and Other related parties...

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)
Follow

20 January 2024 Seems like a Company can provide loan, guarantee or security without any restrictions under following cases:

a. Given to Managing Director or Whole time Director » as a part of the conditions of service extended by the company to all its employees;

or » pursuant to any scheme approved by the members by a special resolution; or

b. Company providing loan in the ordinary course of business activity.

https://taxguru.in/company-law/company-give-loans-directors-relatives.html#google_vignette

RAJA P M

RAJA P M (Expert)
Follow

20 January 2024 Pvt Ltd company can receive loan from Directors, Shareholders. but, company can't give loan to it's directors, shareholders...

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