A director of a private company has taken loan from bank and passed the complete loan to private company. The main borrowor is the director but company is also shown as co-borrower by the bank. All EMIs have to be paid by Director.
What will be the treatment of such case -
- Is it permitted to do so?
- Can company pay exact EMIs to director and book interest in its books?
Help is appreciated.
Raj
As per Rule 2 (ix) of the Companies (Acceptance of Deposit) Rules 1975, the above transaction will be treated as acceptance of deposit by the Company. Hence, unless complied with all the provision of Companies (Acceptance of Deposit) Rules, 1975, the Company seems to have committed an offence under section 58A of the Companies Act, 1956
T R SOOD & CO
New Delhi
CA Inter
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