A director of a Pvt Ltd co. is also a partner of a LLP. The director of the company takes a loan from LLP. How many sections of the Companies Act attract this transaction?
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Companies act, 2013
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As per Section 185 of the Companies Act 2013, no Company shall give loan to the Directors or the relative of the Director who is the partner.
But in case of private Limited Company, the Company can give loan to the Director or relative of Director who is the partner in case the following conditions are satisfied:
1. No body corporate has invested the money in that private Compny
2. amount borrowed from banks or financial institution shall not exceed twice the amount of paid up share capital or 50,000 whichever is lower.
3. The Company has not defaulted in the repayment of loan.
If these conditions are not satisfied, then Company cannot give loan to director or the relative of director who is the partner.
As Section 185 would be attracted as it is the default punishable under the Companies Act 2013
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