COMPANY GIVE LOAN TO DIRECTOR
Vipin Gupta (56 Points)
24 March 2021
Can a company give loan to director?
2 Replies
Mohammed Mukram
(40 Points)
Replied 25 March 2021
As per the above provision, Sec 185 of Companies Act does not allow companies to give loan to directors or its relative. Loan cannot be given to any other person in whom the directors are interested.
Let me explain: any other person in whom the director is interested
any firm in which any such director or relative is a partner;
any private company of which any such director is a director or member;
If the director is a director is any company and 25% of the voting power is in his hand, then company cannot give loan to such entity.
Any body corporate, the Board of directors, managing director or manager, whereof is accustomed to act in accordance with the directions or instructions of the Board, or of any director or directors, of the lending company.
Let me explain: any other person in whom the director is interested
any firm in which any such director or relative is a partner;
any private company of which any such director is a director or member;
If the director is a director is any company and 25% of the voting power is in his hand, then company cannot give loan to such entity.
Any body corporate, the Board of directors, managing director or manager, whereof is accustomed to act in accordance with the directions or instructions of the Board, or of any director or directors, of the lending company.
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