Dear Friends,
Can a unlisted public limited company provide interest free unsured loan to one of its shareholders, if the answer is YES then is there any legal requirement.
Thanks in advance.
Regards
Arun Jaiswal
Arun Jaiswal (CS) (89 Points)
16 October 2012
Dear Friends,
Can a unlisted public limited company provide interest free unsured loan to one of its shareholders, if the answer is YES then is there any legal requirement.
Thanks in advance.
Regards
Arun Jaiswal
CA. AJAY PANCHARIA
(CA)
(527 Points)
Replied 16 October 2012
Jaiswalji,
A company is a seprate business entity. the equity sharholder are ultimate owner of company ,so you cannot give any interest free unsecured loan to anyone (even to shareholder).
But if company want to give a interest free loan then it is to be approved by share holder in Annual genral meeting or extra ordinary general meeting.
Further,if you are giving a with interest loan to a share holder having more than 20% of paid capital of company ,it should be discloused in audit report of company u/s 40 A (2)b
Regard
Ajay Panchariya
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