Unsecured Loans from Directors & Relatives
This query is : Resolved
CA Sanjay Baheti
(Querist)
19 February 2011
A Pvt.Ltd.Co.incorporated in 1994. The Authorised & Paid Share Capital is Rs.100 lacs & 1 lacs respectively. till 31.03.2010 there were no Business Activities. However w.e.f. 01.04.2010 & onwards the co. is going to set up a manufacturing Plant which is under construction Stage. During the year 2010-11 the co. has taken loans fro Directors & relatives to the extent of Rs.125 lakhs till date.
Is any contravention or voilations as per Companies Act.
Moreever whether A director's HUF is considered as relative of Director as per Act.
Please clarify.
Is any contravention or voilations as per Companies Act.
Moreever whether A director's HUF is considered as relative of Director as per Act.
Please clarify.
Jayashree S Iyer
(Expert)
21 February 2011
Taking loans from Directors and their relatives is exempt from the term "Deposits" and hence there is no violation as per Companies Act.
According to me A director's HUF is not considered as relative of Director but members of a HUF is a "relative". For definiton of "relative" please refer to Section 6 of the Companies Act read with Schedule IA.
According to me A director's HUF is not considered as relative of Director but members of a HUF is a "relative". For definiton of "relative" please refer to Section 6 of the Companies Act read with Schedule IA.
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