Hello,
I have started a business recently and have registered it as a private limited company. For startup finance, I have taken a personal loan from a very trusted friend of mine who has no relation to the company ( it is an unsecured loan which was given to me by my friend just on the basis of goodwill, and there is no documented agreement and no strict repayment terms between us). I brought that money to the company as loan received from director (Me), and used that money for various operational expenses. My CA says that a pvt. ltd. company is not supposed to receive such money. He says I can get money from my blood relatives, and put it into my company, but not from a friend. I do not get the logic behind that. Is there any law in India regarding this? Please let me know if there is any definition for "Friends & Relatives", in this context.
My question may sound silly to many of you, but please help me clear my doubts.
Thanks in advance,
Suraj
CAclubindia
