LOAN FROM DIRECTORS OF PVT CO

it takes the nature of deposits

It's equivalent to a pvt. co. accepting a deposit straightaway.

Contrary views welcome

Yes,

But what are the consequences???

And if director gives false statement in written that this loan was made by him out of his funds and the same are not borrowed, then what will be consequences for the company and for director???

LOAN FROM INDIVIDUALS/OUTSIDERS

Kindly appreciate, A private limited company can take unsecured loan from its shareholders, directors and their relatives and the same would not be covered under section 58A and other deposit provisions as such transaction is exempt by deposit rules 1975.

But if a private company take unsecured loans from persons other than its shareholders, directors and their relatives the same would be considered as deposit under section 58A read with Companies (Acceptance of Public Deposit) Rules, 1975.

So Lalit there is no need to worry...

Thanks

But Rule 2 (b) defines deposits as:

Pl. comment.

Read my first reply carefully.

Sorry Sir,

But I am unable to understand.

The amt. recd by a pvt. ltd. co. from its shareholders/directors shall not be considered a deposit subject to the condition that it has NOT been borrowed by him/her in his/her own capacity from some one else.

If the money is found to have been borrowed by the sh'holder/director and then lent to the pvt ltd. co., the amount given to the co. shall lose the exemption of not being called a deposit and hence shall(should) be considered a deposit.

Pl. explain in detail.

Why are you first focusing on proviso. I understand this condition is very important but at the same time this condition is very easy to maintain. If you are answering query then first mention the main provision. Fulfillment of condition is the responsibility of other person.

In my first reply i mentioned the concerned rule i.e. Rules 1975, then he may take reference from there only. 

From the valuable discussion on the forum, I have understood that:

The director/sh'holder may lend to the co. declaring that these are his own funds. The responsibility of the co. is over once the said declaration is available with the co.

It is the director/sh'holder who is at fault and not the co.

Hoping, its true...

Superb.

Now your understanding is absolutely right and on the right track.

And what are consequences for director if he / she gives such wrong declaration??

For giving wrong declaration they may be prosecuted under the civil law of country.