A pvt company wants loan from Bank against shares held as an investment. However bank does not give loan to the company against shares and therefore the shares are transferred to the Demat accounts of directors; took a loan against those shares in the name of director and the same loan was transferred to company. The company has shown secured loan from Bank. The repayment is through director only. Whether the above modus operandi to accquire loan correct? Accounting treatment in the books - correct? What should be the qualification in the report / a simple disclosure will do?
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Loan from Bank Through Director
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Accounting Treatment is wrong.. Company has not shown loan from Bank.This is a loan from Director.Because company is not liable to pay the loan to the Bank.Director is the responsible person only.
Dear Ankur,
I agree with argument realted to wrong accounting entry done herewith.
You need to check the provisions of Sec.58A of Companies Act also. According to me, the transaction is not exempt in Rule 2(ix) of said provision. It seems violation of Provisions of Sec.58A applicable to Private Co.
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