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Loan from directors who is member also?

SANJAY (CHARTERED ACCOUNTANTS) (938 Points)

08 May 2014

Dear Members,

Can a private limited company take loan from its directors? If yes, is there any restriction on it.? Also advice what if the director is also member of the company?

Please quote the section and rules also.

Please reply soon..

Thanks in advance.....

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3 Replies

P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 09 May 2014

Yes, if the director gives declaration required under Proviso to Rule 2(1)(c)(viii) of Companies (Acceptance of Deposits) Rules 2014. This Rule does not state that loan from director who is also a shareholder will be treated as 'deposit'.

Compliances required:

1. Special resolution u/s 180(1)(c) if applicable.

2. Filing Form MGT.14 with ROC with a copy of special resolution (if applicable)

3. Board resolution u/s 179(3)(d)

4. Filing Form MGT.14 with ROC with copy of Board resolution

1 Like

Vandana J Doshi (Practising Company Secretary) (12562 Points)
Replied 09 May 2014

Yes, loans from directors will not be treated as deposits under the new acceptance of deosits rules, 2014 provided the director gives a declaration as required there under....Even if the director is a member, he is giving the loan in the capacity of a director, so it is not a problem.

1 Like

CS MOHIT SALUJA (PRACTICING CS Jalandhar 9914558709) (5155 Points)
Replied 11 January 2015

The rules says that the if loan has been taken from Person who is director on that date, the loan will not be termed as deposit. So although the person is realtive of directo, members or whatever the case may be, if the person is a director as on date of giving loan, the loan will be exempted from definition of deposit.