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Loan from director

Sagar (AM) (123 Points)

07 January 2015

Hi,

Please clarify whether pvt. company can take interest free loan from directors?

and also whether any requirement of paying interest to loan advance by holding to wos?

Thanks

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5 Replies

Sagar (AM) (123 Points)
Replied 07 January 2015

Request Agarwal Sir to please advise.

CS MOHIT SALUJA (PRACTICING CS Jalandhar 9914558709) (5155 Points)
Replied 08 January 2015

Yes a private limited company can obtain the unsecured loan from the directors without any interest. But if the interest is being paid, then it should not be more than the normal bank rates.

1 Like

P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 09 January 2015

Yes, director can give interest-free loan to the company provided he gives a declaration that the loan is not being given out of borrowed funds. Company will have to comply with Sec.180(1)(c).

1 Like