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Can Pvt Ltd take Loan from public?

Paras K (Self-employed) (52 Points)

16 April 2021

Hi everyone,

I would be glad if you could answer these queries for me:

Can a Pvt Ltd accept loan from individuals who are neither directors or shareholders or their relatives?
Can a Pvt Ltd accept loan from members? If yes, then
1. Does the loan need to be notified to ROC?
2. What is the limit of loan that can be accepted?
3. Can interest free loan be given? If not, then what is the minimum rate of interest?
What is the formalities to be kept in mind while taking such loans? Eg. Board resolution, filing with ROC, disclosures etc.

I will be glad if you could quote sections/notifications as well. So that I can refer them for better understanding. Thanks.

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3 Replies

CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 16 April 2021

1. Pvt ltd cannot accept loan from outsiders.

2. 1. Yes pvt ltd company can accept loan from its shareholders.

2. In order to accept deposits from shareholders as well as relatives of directors: The Private Limited Company could accept a maximum of 25% of (paid-up capital + free reserves). However, this limit has been given for existing and proposed deposits.

It Should be notified to ROC.

private limited company wants to accept loan from the shareholders then such company have to follow the following below mentioned procedure.

STEP-1

To check whether company falls in exemption limit of 05.06.2015 or 13.06.2017 to calculate the amount which such company can accept from shareholders.

STEP-2

√ To Hold a Meeting of Board of Director u/s 179(3)

√ To Pass Board Resolution for Borrowing

√ To issue notice for calling of General Meeting u/s 73(2)

STEP-3

√ To Hold a Meeting of Shareholders u/s 73(2)

√ To Pass ordinary resolution to accept loan from shareholder

STEP-4

Company shall file e-form DPT-3 for such loan at the time of acceptance of same.

STEP-5

√ Company shall file e-form DPT-3 every year for such loan on or before 30th June.

C. TREATMENT–LOAN FROM SHAREHOLDER:

As per provisions mentioned above Private Limited Company can accept loan from shareholders subject to exemption of compliance of Section 73(2) provision (a) to (e).

However, such loan from shareholder is no where mentioned under exemption list of definition of Deposit.

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Paras K (Self-employed) (52 Points)
Replied 17 April 2021

Thank you for the elaborate answer. I have read the MCA's notification dated 13th July 2021 (attached) in detail and come to following understanding. Please correct me if there is error in my understanding:

1. A member (even a pvt ltd memeber) can give loan to the company so long as it doesn't exceed 100% of Paid Up Capital + Free Reserves + Securities Premium.

2. A Board resolution needs to be passed disclosing the details of loan, period, rate etc.

3. The need for issuing circular to members, convening a members meeting, filing circular with ROC, making provision for deposit, getting credit rating ARE NOT required if the loan is under 100 % of Paid Up Capital + Free Reserves + Securities Premium.

4. DPT-3 must be filed within 90 days from the end of F.Y. in which loan was given.

Attached File : 3379171 20210417145448 mca notifications summary.pdf downloaded: 53 times