loans to directors

No company can give loan to its director. However, pvt companies aftr fulfilling certain criteria may give loan. So first u need to check that

Can you provide the criteria. It would be of immense help.

Pvt companies who meet foll criteria can give loan to director:

1. In whose share capital, no body corp has invested
2. Borrowing from banks, financial institutions and body corp does not exceed twice the paid up capital or 50 cr whichever is lower
3. No default in repayment of such borrowing subsisting at time of making transaction

Also refer section 185 of the act

thank You very much !!!;;

As per the amended provisions of the Companies Act 2017, read with the Provisions of Section 185 of the Companies act 2013, following is the criteria of providing Loan to Directors:

1. Loan cannot be given to the Director of the Company

2. Loan cannot be given to the Director of the  Company of its holding Company

3. Loan cannot be given to the relative of the directors

4. Loan cannot be given to the firm in which such Director is the partner

5. Loan cannot be given to firm in which such director is director.

However after the amendment in Companies amendment act 2017, Loan can be given by the Company to the following persons after passing special resolution but provided loan shall be utilized for the principal business activities of the Companies

1. Private Company in which such Director is the Director or member

Body corporate in which 25 % or more of voting power rests with Directors 

Or to Body Corporate whose board are accustomed to the directions of the Directors.

But Private Company Can give loan to Directors if its fulfils the following Conditions

1. No Body Corporate has invested in such Company

2. Loan from bank or financial institution shall not exceed twice the paid up capital or 50 crore whichever is less.

3. The Company has not defaulted in repayment of loan