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Maximum loan / deposit

Sreeram (Article) (169 Points)

10 July 2015

As per Notification no.G.S.R.464(E) dated 05/06/2015, clauses (a) to (e) of subsection (2) of section 73 shall not apply to a Private Company which accepts from its Members monies not exceeding 100% of aggregate of the paid up share capital and free reserves.

As per sub-rule 3 of Rule 3 of Companies (Acceptance of Deposits) Rules, no Company referred to in sec 73(2) shall accept or renew any deposit from its Members, if the amount of such deposits together with the deposits outstanding as on date of acceptance of such deposits exceeds 25% of aggregate of paid-up share capital and free reserves of the company.

So what is the maximum amount of Loan that can be accepted by a Pvt.Ltd.Company from its Members? Is it 25% or 100% of paid-up capital & free reserves?

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sagar batra (xxx) (56 Points)
Replied 15 July 2015

Originally posted by : Sreeram
	As per Notification no.G.S.R.464(E) dated 05/06/2015, clauses (a) to (e) of subsection (2) of section 73 shall not apply to a Private Company which accepts from its Members monies not exceeding 100% of aggregate of the paid up share capital and free reserves. As per sub-rule 3 of Rule 3 of Companies (Acceptance of Deposits) Rules, no Company referred to in sec 73(2) shall accept or renew any deposit from its Members, if the amount of such deposits together with the deposits outstanding as on date of acceptance of such deposits exceeds 25% of aggregate of paid-up share capital and free reserves of the company. So what is the maximum amount of Loan that can be accepted by a Pvt.Ltd.Company from its Members? Is it 25% or 100% of paid-up capital & free reserves?

undoubtedly there is ambuiguity, but harmoniously, clear intention of law rests with provisions as per rule that is 25 % and notification is available to private companies who have not exceeded their borrowings beyond 100 % threshold and currently rules permit 25% borrowings from members.however, future amendments if made to rules to increase the extent of deposits even to extent of 100% would not invalidate the notification. A viewpoint can be that, notification came to cope with the changing rules and covers the futuristic aspect and in no sense it shall be understood to override existing rules which provide for 25% of paid up capital and free reserves.