Is a loan taken from shareholders considered as deposit in the case of a public company? Are there any company law procedures or formalities involved in taking such loan?
Lekha Balakrishnan (Lawyer) (56 Points)
28 August 2008Is a loan taken from shareholders considered as deposit in the case of a public company? Are there any company law procedures or formalities involved in taking such loan?
S.Srinivasaraghavan
(Chief Financial Officer and Co)
(11318 Points)
Replied 28 August 2008
Of corse, yes. Please refer to section 58A and 58AA of Companies Act 1956.
Lekha Balakrishnan
(Lawyer)
(56 Points)
Replied 28 August 2008
That is if by a shareholder loan agreement, a shareholder gives a loan to the company (interest free), is it deemed a deposit as under Section 58A and the deposit rules etc.
Please advice..
S.Srinivasaraghavan
(Chief Financial Officer and Co)
(11318 Points)
Replied 28 August 2008
Yes please.
Dhiraj Bagri
(Manager - Finance & Accounts)
(174 Points)
Replied 21 April 2011
Srinivas Ji,
I need some clarification wrt the issue related to interest free loan from shareholders: -
A company "ABC Ltd" is shareholder (holding 10% shares) of company "XYZ Pvt Ltd". Can "ABC" give interest free loan to company "XYZ".
As far as I think from income tax point of view we can not give.
Need clarification.
Thanking you
Jaideep
(Service)
(1368 Points)
Replied 21 April 2011
Originally posted by : S.Srinivasaraghavan | ||
Of corse, yes. Please refer to section 58A and 58AA of Companies Act 1956. |
Dhiraj Sir,
Provisions of Intercorporate loan will attract also check section 295 of the Companies Act, which provide fro loan to directors and private compnaies in which director of ABC Ltd are director.
Regards
Jaideep Pandya
CA Sandeep Kumar
(Audit Assistant)
(804 Points)
Replied 21 April 2011
Is there any restriction in income tax act?
Shareholder being a company can give loan to the company, tax implications may/may not arise, but company being shareholder can give loan. Tax implications may follow. But i doubt any tax implication in this regard/.
If company gives loan to shareholder, then if conditions mentioned u/s 2(22) are satisfied, then tax implications may follow.
please correct me if am wrong.