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Loan from director

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Bhagwati Prasad Singh

Company Secretary

46 Points Posted on 04 February 2014

Dear All,

My Comopany is a unlisted Public Company. Direcors of my Company have transferred some amount in the Companies Bank account and want to treat it as unsecured loan.

My query is that whether it will be treated as unsecured loan or deposit u/s 58 A and what will be the procedure for the same

Thanks in advance

Replies (1)

Sumit Jaiswal

Company Secretary

538 Points Posted on 05 February 2014

Hi.

My view is that unsecured loans received by a public company from its director would not qualify as "deposit" under the Companies (Acceptance of Deposits) Rules, 1975, as amended. This would be the case only if the director from whom money is received, furnishes to the company at the time of giving the money, a declaration in writing to the effect that the amount is not being given out of funds acquired by him by borrowing or accepting from others.

You will find attached the MCA notification which mentions the same.

I would suggest you to record the same by passing a board resolution. Some other sections/compliances you may like to check: (i) Sec 301 of Companies Act, 1956. (ii) Sec 180 of Companies Act, 2013.

Other views are welcome.