Borrowing by the company

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Priya

Professional

117 Points Joined June 2011

Mr. A who was director of a Company paid filing fee for Company A. Mr. A is neither a Director nor a Shareholder at present. such amount is shown in current liabilities of the Company. Can a Company take such amount from Mr. A .? Is is a compliance under Companies Act, 2013?

Replies (2)

Jatin Bajaj

2930 Points Joined April 2016

As per the provisions of the Companies Act, if any loan or advance is given by the Director of the Company to the Company at the time when he is the director of the Company, then such amount given shall not amount to deposit. Further the provisions of deposit shall not apply. So Company can repay the amount to him in current date. Such advance shall not be more than 36 months.

Aur Company can allot the shares by way of conversion of Loan into equity if at the time of recipt of the Loan the agreement was executed with such person that such amount would be converted into equity.