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Loan by a Pvt Ltd company to director or HUF of director

anonymous (proprietor) (237 Points)

02 March 2022

How can a private limited company give loan to

a) director

b) HUF of director

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4 Replies

Ashok kumar (CA Final) (587 Points)
Replied 02 March 2022

Private Limited Company can give loan to a managing/whole time director of the company if:

It is approved by a special resolution in the meeting and
If this facility is given by a company to all its employees.

and

No company shall directly or indirectly give any loan to any other person or body corporate exceeding 60% of its paid up share capital, free reserves and share premium

Chirag (Professional) (1979 Points)
Replied 02 March 2022

Section 185 is not applicable to Pvt cos ,So Company if not a subsy of Public co(deemed public Co)then it may give loan to director ,subject to put it before board and fulfillment of following conditions

a) No body corporate is shareholder
b) Borrowings are less than 50 crore or 2x of paid up capital
c)Company didn't make default in repayment of loan

You also have to check AOA and Stipulations by lender