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Loan from directors
A Director has borrowed money from his friend. Can he invest the borrowed money in the Company and the Company can allot shares to him in respect of the money borrowed by him ?
Replies (4)
Allotment of Shares can be done but in case of loan to company, the company need to take a declaration from the director that he has not given out of borrowed funds
you may see the format at https://www.dokmart.com/documents/declaration-by-director-in-respect-of-loan-given-to-the-company/info
The Director has borrowed the money he cant give declaration that he has not borrowed the amount.
Yes, director can purchase shares of the company out of borrowed funds. There is no prohibition on this.
I agree with Agrawal Sir.
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