Dear Sir,
I'm working as an accountant in a private limited company. We have an OD account in our company name for 1 cr. We need urgent fund requirment in our another partnership firm (same directors started a partnership firm). Can we transfer this funds to the partnership firm as a loan? Please help me on this matter.
Sec 185 of the Companies Act clearly prohibits advancement of a loan to director or any other person in which the Director is interested in.
Violation of the same attracts penalty of 5-25 lacs on the company as well as on the recepient of loan.
However, loopholes are there to explore but are unrecommended.
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