Sec 185

568 views 3 replies

CAN A PVT. CO. GIVE LOAN TO ITS DIRECTORS/RELATIVES ON INTEREST??

Replies (3)

Only if it is an NBFC and its ordinary business is to provide loans or guarantees or securities at an interest  not less than the RBI rate. Otherwise the same is strictly prohibited in the new Act.....

Section 185 specifically rohibits all the company to give any loan/ guarantee/ security to its directors or the persons in whom the director is interested.

 

Moreover, no company can give any loan to an indiviadual unless and untill it has obtained NBFC Certificate from RBI. Only if it is an NBFC and its ordinary business is to provide loans or guarantees or securities at an interest  not less than the RBI rate. Otherwise the same is strictly prohibited in the new Act....

However, a company can invest and provide loan under section 186 to the other corporate.

Originally posted by : MOHIT SALUJA
Section 185 specifically rohibits all the company to give any loan/ guarantee/ security to its directors or the persons in whom the director is interested.
Moreover, no company can give any loan to an indiviadual unless and untill it has obtained NBFC Certificate from RBI. Only if it is an NBFC and its ordinary business is to provide loans or guarantees or securities at an interest  not less than the RBI rate. Otherwise the same is strictly prohibited in the new Act....

However, a company can invest and provide loan under section 186 to the other corporate.

Mohit ji,

On the question "whether a corporate company can provide loans to other body corporate in which directors are interested?" the answer is no and every body is suggesting the same.

But I want to know that Sec. 295 & 372a are same to Sec. 185 & 186.

How in old act company provide loans to related company under 372a and escapes sec. 295?

Please reply

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
10 June 2026
Senior Account Executive

JDS Advisory LLP

Ahmedabad

CA Inter

View Details
Company
ARTICLESHIP 04 June 2026
Article

Rakhecha & Co.

New Delhi

CA Inter

View Details
Company
ARTICLESHIP 09 June 2026
Article Trainee

Numbertree LLP

Mumbai

CA Inter

View Details
Company
20 June 2026
Chartered Accountant

ANV & Company

New Delhi

CA

View Details
Company
ARTICLESHIP 24 June 2026
ARTICLE ASSISTANT

BHUPINDER SHAH AND COMPANY

New Delhi

CA Inter

View Details
Company
24 June 2026
Chartered Accountant - GST & Direct Tax

APL

Mumbai

CA

View Details
Company
19 June 2026
Accounts Executive

Getfive Advisors Pvt. Ltd.

Ahmedabad

CA Inter

View Details
Company
24 June 2026
Senior Account (VA Client Operations)

Karbon Business

Bengaluru

CA Inter

View Details