dear sir
whether company gives loans to director( md or ed) it is applicable to public & pvt company?.my friend client company pay 1crores loan to director advance. because director buy new land in our own name and director gives monthly interest & principal. is it correct ?
Section 185:- The section provides that no company shall directly or indirectly advance any loan to its director or to any other person in whom the director is interested or give any guarantee or provide security in connection with the loan taken by the director or any such other person. The term “any other person in whom the director is interested” includes firm in which director or his relative is partner and private companies in which the director may be director or shareholder.
To sum up advancement of loan to any individual or company or firm in whom the director of the lending company is related is strictly prohibited.
The above provision applies to both Public and Private Company.
As per section 185, no company i.e. private and public both caompanies can not give any loan to directors/ Managing Directors.
Subject to some exceptions as mentioned in section 185
Mr. x a director in a company and also have a construction properitarship concern. company construction work properitarship concern yaha par director prop. h us se karwana chahti h to kya company ye kar sakti h. please sir reply as soon as possible.
thanking you
CAclubindia
