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Loans to directors

Pvt ltd 182 views 1 replies

Manjunath K

DIRECTOR

35 Points Joined March 2011

Need answer for below topic: -

1) Am a director in a private limited company. Also own part of the company's shares.

2) Can the company give me loan for repaying my personal loan?

3) If yes, what procedure to be followed and whether company should levy any interest on such loans?

Replies (1)

Assumption:
1. Company is not involved in such financing business in ordinary course.
2. You are WTD.

As per Section 185 of CA2013 loan can be given to Director provided.
1. Such facility is available to all employees; or
2. Pass SR for such scheme.

You will also have to comply with Section 188 of CA2013 (except Sub-section 1)

Please take professional advice before proceeding as contravention of Section 185 can led to imprisonment upto 6 months.