Section 186(2)(a) of CA 2013 restricts loans to 'any person' (which includes employees also). It means following formalities will have to be completed for giving loans to employees:
1) Board resolution u/s 186(5) with cnsent of all directors - only in Board meeting (not by circulation)
2) Prior approval of members by special resolution if the limit specified in Sec.186(2) is exceeded
3) Disclosure in financial statements [Sec.186(4)]
4) Prior approval of financial institutions in case of default [Sec.186(5)]
5) Rate of interest to be as per Sec.186(7)
6) No loan in case of default in deposits [Sec.186(8)]
7) Entry in loan register [Sec.186(9)]
etc. etc.
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