loan to firm
shantaveer (Audit Associate) (21 Points)
01 July 2017
whether a pvt ltd company can give loan to firm
2 Replies
Sanjay
(Associate)
(152 Points)
Replied 01 July 2017
Yes, but they need to comply with provision of 185 and 186
Sudhir Todkar
(CS Professional)
(1021 Points)
Replied 02 July 2017
Yes, a private limited company can give loan to a partnership firm in India but the section 185 of Companies Act, 2013, restrict the company on giving loans, guarantee or provide security to Directors or any other person in whom Director is interested.
The ways via which a director can be interested has been covered via 5 inclusions:-
Point 1 & 2
The inclusion in point 1 and 2 covers the Director and his relatives too.
It Says
1) Any Director of Lending Company.
2) Any Relative of Director.
3) Director of a Company which is its holding company.
4) Any firm in which such director is partner or relative is a partner.
5) Any partner of such Director.
Point 3,4 & 5
The inclusion in point 3,4 & 5 only include Director but not his relatives.
It Says
1) Any PRIVATE Limited company in which such director is a Director or member.
2) Body corporate in which such Director or Directors hold more than 25% shares.
3) Body Corporate, MD, BOD or manager accustomed to act in accordance with direction of board or Director of lending company.
A body corporate does not include a co-operative society. But it includes a foreign company.
The ways via which a director can be interested has been covered via 5 inclusions:-
Point 1 & 2
The inclusion in point 1 and 2 covers the Director and his relatives too.
It Says
1) Any Director of Lending Company.
2) Any Relative of Director.
3) Director of a Company which is its holding company.
4) Any firm in which such director is partner or relative is a partner.
5) Any partner of such Director.
Point 3,4 & 5
The inclusion in point 3,4 & 5 only include Director but not his relatives.
It Says
1) Any PRIVATE Limited company in which such director is a Director or member.
2) Body corporate in which such Director or Directors hold more than 25% shares.
3) Body Corporate, MD, BOD or manager accustomed to act in accordance with direction of board or Director of lending company.
A body corporate does not include a co-operative society. But it includes a foreign company.
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