Loan to/from directors

Sec 185 is concerned with Loan/Gaurantee/security to director and to any other person in whom the director is interested whereas Sec 186 dealt with Inter corporate deposit (ICD).

Originally posted by : sagar parakh
	Sec 185 is concerned with Loan/Gaurantee/security to director and to any other person in whom the director is interested whereas Sec 186 dealt with Inter corporate deposit (ICD).

what is the limit

1) For giving loan - please check applicability of section 185 because if your pvt. ltd is small and other body corporate does not hold share in your company or your borrowing is not exceeding double of paid up share capital then, section 185 would not apply
but if section 185 applies then loan, security, guarantee is strictly prohibited
2) now if talk about section 186, - you can give loan to those THIRD PARTIES IN WHICH DIRECTOR IS NOT INTERESTED and that too within the limit specified in section 186 . If loan is going beyond the limit then special resolution in general meeting will be required.

DISCLAIMER- This is my opinion, please consult your legal advisor before taking any decision .