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Unsecure loan to company

Niral Patel (job) (89 Points)

23 April 2016

Can a private limited company take unsecured loan from the HUF whose Karta is the Director of that Company ?

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3 Replies

CA VIRAL SANGHVI (Finance head) (681 Points)
Replied 23 April 2016

As per the Companies Act 2013, Private company can borrow only from directors apart from banks and financial institutions provided the director gives declaration that the amount that he is giving is not out of borrowed funds.

So Private limited company can not take unsecured loan as per section 73.

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Pratik Shah (Practising Company Secretary) (4432 Points)
Replied 23 April 2016

No, Private Companies can not take loans from HUF. However, if HUF is a shareholder of such Company, then it can take loan from HUF upto 100% of Paidup capital and free reserves.

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CS Arjun Rajagopal (B.com, ACS) (1056 Points)
Replied 23 April 2016

Originally posted by : CA VIRAL SANGHVI
	As per the Companies Act 2013, Private company can borrow only from directors apart from banks and financial institutions provided the director gives declaration that the amount that he is giving is not out of borrowed funds. So Private limited company can not take unsecured loan as per section 73.