A private limited company wants to collect unsecured loan from its members.
Members giving loan are holding only 1% of shares in the company.
The company will pay interest of 15% pa.
Is there any restriction on accepting the loan?
Is there any compliance or filing required for acceptance of loan?
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 take unsecured loans from persons other than its shareholders, directors and their relatives the same would be considered as a violation of section 3(1)(iii) of the Companies Act, 1956.
you have to disclose the same in the financial statements
AS-18 is applicable subject to condition that they exercise a Significant influence - participation in the financial and/or operating policy decisions of an enterprise, but not control of those policies.
Reply for Mr Ravitheja
Dear Professional friends As per AS 18 available on icai.com,
AS 18 is applicable to following companies:
1. Enterprises whose equity or debt securities are listed whether in India or outside India. 2. Enterprises which are in the process of listing their equity or debt securities as evidenced by the board of directors’ resolution in this regard. 3. Banks including co-operative banks. 4. Financial institutions. 5. Enterprises carrying on insurance business. 6. All commercial, industrial and business reporting enterprises, whose turnover for the immediately preceding accounting period on the basis of audited financial statements exceeds Rs. 50 crore. 7. Turnover does not include ‘other income’. 8. All commercial, industrial and business reporting enterprises having borrowings, including public deposits, in excess ofRs. 10 crore at any time during the accounting period. 9. Holding and subsidiary enterprises of any one of the above at any time during the accounting period. The enterprises which do not fall in any of the above categories are not required to apply this Standard.
As per Companies Ac, 1956: There is no restriction accepting the unsecured loans from members and directors and their relatives in a private company.
As per Companies Act, 2013:- There is a restriction on accepting teh unsecured loans from relatives of directors and members.
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