Loan from a share holder

After the Companies Act 2013 becoming operational, a Private Limited Company cannot accept loan from shareholders.

The Companies Act ,1956 permitted private companies to borrow from directors, shareholders and relatives of directors. However theCompanies Act 2013 has brought a major change in the borrowing provisions for private companies and removed shareholders and relatives of directors from the list of lenders. Going forward the private companies can borrow only from directors apart from banks and financial institutions provided the director gives a declaration that the amount that he is giving is not out of borrowed  funds.

As for as Income Tax Act 1961, it doesn't say anything yet. But necessary changes in line with Companies Act 2013 should be coming our way very soon

agree with ankit ji.....

With the companies act 2013, loans from shareholders will be treated as deposits and the company have to then comply with additional ROC formalities with respect to deposits...

Hi,

As per my understanding, as long as the director holds the directorship, their is no problem in accepting the same since the loan is being given in the capacity of a director. However, if he resigns from directorship and remains a member, then the same will be treated as deposits..

Regards