Loan By Company

Hye Mr. Ashish,

Private Company can give unsecured loan to any company or individual.

Section 372A of Companies Act has put restrictions on inter-corporate loans. However, these are applicable only to public company and not to private company, unless it is a subsidiary of public company.

However, it will be prudent practice to ensure that giving such unsecured loan is in benefit of company and the receiver of loan is financially strong enough to repay it with due regularity. (To any experts - if I am wrong, kindly let me know)