Loan & advances

A Private Company can accept loan / deposit from any other company and would NOT be deposits under the Companies Act 2013, however, it cannot accept monies from another company (other than its wholly owned holding company) if: • The lending company’s any director is a director or member of the company. However, if the lending company is a private company then with effect from 5th June 2015 it can give loan to another private company even if its director is the director or member of the recipient company if: o In the lending company’s capital no other body corporate has invested any money i.e., it’s shareholder does not include any body corporate; o If the borrowings of the lending company from banks or financial institutions or anybody corporate is less than twice its paid up capital or Rs. 50 crores, whichever is lower; and o Lending company is not in default in repayment of such borrowings subsisting at the time of giving such loan. • The lending company’s director individually or along with one or more of its directors exercises or controls not less than 25% of its voting rights; or • It’s Board of Directors, MD or Manager is accustomed to act in accordance with the directions or instructions of the Board, or any director or directors of the lending company.