What is the minimum rate of interest a company must charge for the loan which it has obtained from Directors & Sister Concern? Is there any rate prescribed by The Companies Act, 1956.
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Minimum rate of interest for loan obtained from directors.
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plz tell me ans of this question ...injection of private capital and managment with inferior technologies lead to more efficient utilization of resources thus releasing public finances for alternative uses. it is true or false...
n give reason
Hello,
There is no hard & fast rule for the same
But it should be reasonable I.e. Not below the market rate of interest.
Dear Vinay,
1. None of the provisions of the companies act, provides for taking loans from directors, so if the articles of association provides for it, companies may take loans from directors as agreed upon between the parties.
2. Sec. 372A of the companies act, 1956 deals with intercorporate loans(sister concerns also) and rate of interest shall not be less than the bank rate prevailing, but this section does not apply to private companies which is not a subsidiary of public company.
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