LIVE GST Certification Course by CA Arun Chhajer begins 27th April. Register Now!!

Loan By Company

Ashish Sharma (Service) (1028 Points)

08 March 2010

Hi, is there any restriction on private limited company on giving unsecured loan to its Directors friends by cheque

Reply
Follow
Share

4 Replies

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 08 March 2010

Loan to director is governed by section 295. But the same section is not applicable to a purely private company. So you may go ahead. However recording of the same transaction in board minutes is necessary. As dir is interested so disclosure of interest from dir u/s 299 is required. Further he can not vote u/s 300.

Rasesh (CS CWA MBA (Fin) B.Com LL.B (Spl)) (6501 Points)
Replied 11 March 2010

Agree with the above view. However, Deemed dividend : Sec 2(22)(e) of the Income Tax Act, could be attracted in case the Director holds more than 10% voting right in the Company and the transaction satisfies other conditions given in the section.

HARDIK (COMPANY SECRETARY NCFM (Corporate Governance )) (664 Points)
Replied 12 March 2010

As per my interpretation In case of purely private company interested director can participate in discussion and vote as per section 300(2).

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 12 March 2010

Originally posted by : HARDIK
	As per my interpretation In case of purely private company interested director can participate in discussion and vote as per section 300(2).