30 May 2015 In cases 1) if the karta is a Director of Company and other coparceners aren't !

2) If Everyone is a Director of the company !

and Does Key Management Personnel applicable here in relation to HUF ?

Akshay nagaram

Akshay nagaram (Querist)

04 June 2015 In cases 1) if the karta is a Director of Company and other coparceners aren't ! 2) If Everyone is a Director of the company ! and Does Key Management Personnel applicable here in relation to HUF ?

Read more at: https://www.caclubindia.com/experts/modify_message.asp?entry_id=982871

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

02 August 2025 This is a nuanced query relating to **unsecured loans from HUF** under the **Companies Act, 2013**, especially when the **Karta of the HUF is also a director** of the company.

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### 🔍 **Core Question:**

> Can an unsecured loan received from an HUF be considered as a loan from a **director**, if the **Karta of the HUF is a director** of the company?

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## ✅ **Answer Overview:**

### 🔹 **As per Companies Act, 2013**:

An **HUF** is a separate legal entity from its **Karta**. Even though the **Karta may be a director** of the company, **a loan from HUF is not treated as a loan from director**.

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## 🧾 **Detailed Case-wise Analysis:**

### ✅ **Case 1: Karta is a Director, other coparceners are not**

* Even if the **Karta is a director**, the HUF is **not equivalent to the director himself**.
* Therefore, **loan from HUF is treated as a loan from a third party**, **not** a loan from director.
* Hence, **it will be considered a "deposit"**, unless it qualifies under the exemptions in the **Companies (Acceptance of Deposits) Rules, 2014**.

> 📌 **Conclusion**: Not exempt — **must comply with deposit provisions**.

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### ✅ **Case 2: All Coparceners are Directors**

* Even if **all members of the HUF are directors**, the **loan from HUF is still not treated as a loan from directors** individually.
* HUF is an entity separate from the individuals who compose it.
* The **only way it could be exempt** is if **loan is given in personal capacity by a director**, **not by HUF**.

> 📌 **Conclusion**: Same as above — **loan from HUF ≠ loan from director**.

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## 🔹 **What If the Loan Was from Director (in personal capacity)?**

If a **director gives a loan in their personal capacity** (not through HUF), then:

* It **may be exempt from "deposit"** under **Rule 2(1)(c)(viii)** of Companies (Acceptance of Deposits) Rules, 2014.
* Conditions:

1. Director gives a declaration that **funds are not borrowed**.
2. Company discloses loan in **Board's Report**.

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### ❓ **Does “Key Managerial Personnel (KMP)” apply to HUF?**

* The term KMP is defined in **Section 2(51)** of the Companies Act, 2013.
* KMP includes CEO, CFO, CS, MD, WTD, etc. — it applies to **individuals only**, **not HUFs**.
* So, **HUF cannot be considered a KMP**.

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## 📌 Summary Table

| Scenario | Loan From Director? | Treated as Deposit? | Remarks |
| --------------------------------------------- | ------------------- | ------------------- | ----------------------------------- |
| HUF gives loan (Karta is Director) | ❌ No | ✅ Yes | Treated as 3rd party loan |
| HUF gives loan (All members are Directors) | ❌ No | ✅ Yes | Still HUF ≠ Directors |
| Director gives personal loan with declaration | ✅ Yes | ❌ No | Exempt under Rule 2(1)(c)(viii) |
| Loan from HUF without declaration | ❌ No | ✅ Yes | Must comply with deposit provisions |

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### 📚 **Relevant Provisions**:

* **Companies Act, 2013**
* **Rule 2(1)(c)** of the **Companies (Acceptance of Deposits) Rules, 2014**
* **Section 73 to 76A** (relating to Deposits)
* **Section 2(31)** – Deposit Definition
* **Section 2(51)** – Key Managerial Personnel (KMP)

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Let me know if you need a **draft of director’s declaration** or help checking deposit compliance for your case.

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