Loan to a private limited from a huf

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Businessman
33 Points Posted on 27 March 2016

Hi.

Can a HUF can be made a shareholder in a Pvt Ltd company and then give a loan to the said Pvt Ltd Company.

Also, in this specific case, the Karta of the HUF is also the Managing Director of the said Pvt Ltd Company.

It would be great if some one could give a detailed explanation rather than a Yes or No answer.

Thanks.

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On 27 March 2016 at 11:50 Report
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Entrepreneur | Corporate Law Advisor | L
136 Points Posted on 28 March 2016

Hi Ankit,

  • A HUF can become a shareholder of a Company through its KARTA 
  • A HUF cannot give loan to the Company, if given it will be treated as "Deposits" which is prohibited as per Section 73 of the Companies Act, 2013
  • As the Karta is also a MD in your Company he can give loan to the company in capacity as MD and not as KARTA of an HUF, being the Shareholder
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On 28 March 2016 at 16:22

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