unsecured loan from directors

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seema singla (Querist)

19 November 2008 Can a Public Ltd Co. and a Pvt. Ltd CO. can take unsecured loans from its directors who are also the shareholders.
If yes, then upto what amount?
Further, can a public ltd co. and a pvt. ltd co. can advance loans to its directors. If yes, then upto what amount?
Please ans
Thanx

Ravikumar.G

Ravikumar.G (Expert)

19 November 2008 Loan can be taken no limit.

Loan to directors - shall comply with sec 295 of the act.

Pvt company - Not applicable of sec 295.

any transaction represented by a book debt.

Ravikumar.G

Ravikumar.G (Expert)

19 November 2008 as per sec 295 - Previous approval of CG is required in every case falling under this section.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

19 November 2008 If a profit making private limited company give loan/advance to its directors provisions of section 2(22)(e) of the income tax act,1961 applies.

seema singla

seema singla (Querist)

25 November 2008 Thanx for the answer
Further I want to know that loan to a director can be interest free or not in a pvt ltd company earning few profits.
Plz ans.
thanx.

chintan

chintan (Expert)

17 December 2008 First of all Section 295 is not applicable to a private limited company.In my opinion interest free loan can be given to a director by a private ltd Co.

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