Hi everyone, I have a quick question.
If the new ruling is passed Pvt. Ltd. Co.s would be required to pay 30% tax on the value of shares issued over and above their fair market value. Further, as far as I'm aware Director's cannot introduce borrowed capital into the Company (Pvt Ltd.). Is this true, and if yes what is a legitimate way to introduce Director's money (borrowed as loans) into the Company??
Sec 3(1)(iii) of Companies Act, 1956 and Articles of Association of Company prohibits a private company to accept or invite the deposits from the persons other than its members, directors or their relatives.
Further, Rule 2(b)(ix) of Companies (Acceptance of Public) Deposits Rules, 1975 reads as under –
“Deposit means any deposit of money with, and includes any amount borrowed by, a company, but does not include any amount received by a private company from a person who, at the time of the receipt of the amount, was a director, relative of director or member
Provided that the director or member, as the case may be, from whom money is received, furnishes to the company at the time of giving the money, a declaration in writing to the effect that the amount is not being given out of funds acquired by him by borrowing or accepting from others.”
Hence, the director is not allowed to make loan out of its borrowings as declaration is also required tobe given.
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