Section 180 of companies act 2013

Pvt ltd 5486 views 4 replies

Dear  Freinds,

Can you please help me out with one Query...

Our Company Abc Pvt Ltd intends to borrow unsecured loan i.e a term loan from a Nbfc Company (non banking financial Co) .In our case the reserves and surplus is negative... my query is

 In reference to the section 180 of the companies Act 2013 which says that the borrowings should not exceed paid up capital and frees reserves as per which are we supposed to consider the negative reserves or Surplus?

Also the exemption given to this section which says that Explanation.—For the purposes of this clause, the expression “temporary loans”means loans repayable on demand or within six months from the date of the loan such as short-term, cash credit arrangements, the discounting of bills and the issue of other short-term loans of a seasonal character, but does not include loans raised for the purpose of financial expenditure of a capital nature.

Do we come under the above category of temporary laon as we are taking loan for short period.repayable on demand. 

 

Regards 

Namrata Pai

 

 

Replies (4)

NBFC is not a bank.  Sec.180 excludes temporary loans from company's bankers in ordinary course of business.  Hence the loan from NBFC will be covered u/s 180. 

 

'Free reserves' has been defined in Sec.2(43).   Negative balance in P&L Account will have to be reduced from amount of share capital to arrive at the limit for borrowing u/s 180.

 

Thanks

 

Originally posted by : namrata
Dear  Freinds,

Can you please help me out with one Query...

Our Company Abc Pvt Ltd intends to borrow unsecured loan i.e a term loan from a Share holder i, if not then from whome they can borrow money what is the step.
 
 

Hi Namrata , I completely agree with Agrawal Sr.

 

The loan taken will not be treated as temporary loans.

Hi Khusbu,

 

loans from shareholders will be treated as deposits and thereafter you will have to comply with additional requirements with ROC...You can borrow from directors ( subject to their declaration), companies, banks ,etc....


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