Acceptance of unsecured loan by private company

A private limited company can take unsecured loan from its shareholders, directors and their relatives and the same would not be covered under section 58A and other deposit provisions as such transaction is exempt by deposit rules 1975.

Originally posted by : Learner
	A private limited company can take unsecured loan from its shareholders, directors and their relatives and the same would not be covered under section 58A and other deposit provisions as such transaction is exempt by deposit rules 1975.

Agreed.

Yes it can..

Yes it can...that mean a company is taking loan from Director because the identity of sole proprietor with its owner is same.

can private company accepts unsecured loan from relatives of members???

Hi,

INTER CORPORATE LOANS

Kindly appreciate, A public and private limited company can take loan from other company and body corporate and the same would be covered under section 372A as an inter corporate loan. The above is exempt from the deposit rules, 1975.

A public and private company can also take loan from Banks/PFIs under the same section 372A as an inter corporate loan.

But if such company takes loan from an individual the same would be considered as public deposit under section 58A read with Companies (Acceptance of Public Deposit) Rules, 1975.

As per the definition of deposit given in Rule 2 of the said rules “deposit means any deposit of money with and include any amount borrowed by, a Company but does not include certain amounts.

There are certain amounts which are not considered as deposit as per the rules above and such amount includes inter corporate transaction hence amount taken by company/bank and PFI from other corporate are not considered as deposit.

On the other hand amount taken by public company from individual is not covered in the exemption given by the said rule, hence amount taken by public company from individual is considered as deposit under section 58A read with Companies (Acceptance of Public Deposit) Rules, 1975.

LOAN FROM INDIVIDUALS/OUTSIDERS BY A PRIVATE COMPANY
 

Kindly appreciate, A private limited company can take unsecured loan from its shareholders, directors and their relatives and the same would not be covered under section 58A and other deposit provisions as such transaction is exempt by deposit rules 1975.

But if a private company takes unsecured loans from persons other than its shareholders, directors and their relatives the same would be considered as deposit under section 58A read with Companies (Acceptance of Public Deposit) Rules, 1975 and would be considered as a serious violation of section 3(1)(iii).

In case of this default consequence under section 43 shall apply.

Regards

Amount taken by public company from DIRECTORS is covered in the exemption given under Companies (Acceptance of Public Deposit) Rules, 1975.

Hi,  My friend running a private ltd company, (Authorized Capital Rs. 10.00 Lakh) his friends (20 Nos) are ready to invest as unsecured loan each Rs. 100 lakh @ zero percent interest, for that they are asking each 2500 shares @ face value (Rs. 10.00). (My friend having 50000 shares, remains 50000 for all the friends). Is it possible with ROC ACTS.

krishna murthy

can a private Co. take Deposite from its director & what is maximum limit for that &  what limit the co. must repay it.

please advice...