COMPANY GIVE LOAN TO DIRECTOR

Can a company give loan to director?
Replies (2)
Quick Summary
Under Section 185 of the Companies Act, companies are generally prohibited from giving loans to directors or their relatives. This restriction also extends to other entities where directors have a significant interest, such as partnerships or private companies where they are a director or member. There are specific rules regarding loans to other bodies corporate where directors' influence is substantial.

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.
Excellent sir

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