Loan from friends and relatives to a director

Pvt ltd 2608 views 4 replies
User Avatar

Director
24 Points Joined April 2013

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

 

 

0 Reply Share Follow
On 21 April 2013 at 22:37 Report
Replies (4)
Guest
I m not sure but i think we can take loan from anyone, there may be interest related rules, and section 269ss and 269t apply on all types of loan.
Reply
On 23 April 2013 at 11:58
User Avatar

Company Secretary
1594 Points Joined December 2010

This may sound silly to you sir but your CA is correct in his interpretation. If a pvt. ltd company cannot accept deposit from person other than its directors, members and relatives.

The easy solution for this problem is allot or transfer the any no of shares (it may be even 10 shares) of the Company in your friend's name. This will make him member of the Company and then you can accept the money from him. You may consult your CA about this.

Revert back for any further query

Reply
On 23 April 2013 at 12:13
Guest
U, as a director has shown loan in financial statements, u took the loan from friens that is a personal issue, the loan from friend is not directly shown in accounts, loan from director(owner) is shown
Reply
On 23 April 2013 at 12:56
User Avatar

CA; CS-Final (One Group); DISA (ICAI); I
442 Points Joined August 2009

Dear Suraj,

Law is Law, whether Logical or not. I agree with your CA as well as CS Sneha Binani. You mentioned that you had taken personal loan from your friend and you have given that amount as unsecured loan to your Pvt. Ltd. Company. To best of my knowledge, this is not correct. As per provisions of Companies Act, you as a director can not give loan to your company out of borrowed funds. Further at the time of giving unsecured loan to the company, the director has to give undertaking to the company that it is not from borrowed funds.

Reply
On 28 April 2013 at 19:40


CCI Pro

Leave a Reply

Post Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Recent Threads

More recent discussions | Post

Related Threads
Loading