Unsecured Loan From Directors and Shareholders



 DEAR EXPERTS,

  CAN  A PVT. LTD. CO. TAKE UNSECURED LOANS FROM ITS SHAREHOLDER, DIRECTORS AND FROM THE RELATIVES OF THE DIRECTORS AND SHAREHOLDERS AND UPTO WHAT LIMIT.DOES SECTON 58A , COMES IN WAY.

 
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Chartered Accountant

Please note that  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.

 
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Practising C S

Dear Renu,

In case of pvt ltd cos. , there is no limit on the amount of loan taken from members, directors & their relatives.

Shashikala Shah

PCS

 
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Pursuing CA

Agree with Ms Shashikala...there is no limit on Loans taken from directors or shareholders in the case of a private limited company

 
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Company Secretary and Compliance Officer

Hi,

 

INTER CORPORATE LOANS

 

Kindly appreciate, A public and private limited company can take loan from other company and body corporate and the same would be covered under section 372A as an inter corporate loan. The above is exempt from the deposit rules, 1975.

 

A public and private company can also take loan from Banks/PFIs under the same section 372A as an inter corporate loan.

 

But if such company take loan from an individual (Not from director or member) the same would be considered as public deposit under section 58A read with Companies (Acceptance of Public Deposit) Rules, 1975.

 

As per the definition of deposit given in Rule 2 of the said rules “deposit means any deposit of money with and include any amount borrowed by, a Company but does not include certain amounts.

 

There are certain amounts which are not considered as deposit as per the rules above and such amount includes inter corporate transaction hence amount taken by company/bank and PFI from other corporate are not considered as deposit.

 

On the other hand amount taken by public company from individual is not covered in the exemption given by the said rule, hence amount taken by public company from individual is considered as deposit under section 58A read with Companies (Acceptance of Public Deposit) Rules, 1975.

 

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 a violation of section 3(1)(iii) of the Companies Act, 1956.

 

Revert if there is any doubt.

 

Regards


Total likes : 5 times

 
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Thanx to you all.

 
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sir,

if a director has taken a loan from a bank,and he transfer the funds to comapny, comapny directly repaying the loan to bank on behalf of director,

then can it be treat as a loan taken from bank by the comapny or it should be treat as a unsecured loan from director?

can a private limited company take interest free loan from director?

 
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Company Secretary

Hi frends,

Pls clarify some points on unsecured loan from Director in a Public Co.

1.Whether the unsecured loan taken by public co. is exempetd u/s 58A.

2. As per deposit rule 2(b)(Xi) unsecured loan taken from Directors in pursuance of stipulation of financial institution is exempted deposit.

whether it is necessary that the FI should incorporate in its sanction letter that promoters are required to contribute to the funds of the Company.

3. whether unsecured loan, if public ltd. Co. can take, should by interest free.

 

 

regards,

POonam

 
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Dear Ankurji ,

If any company taken any unsecured loan from outsider apart from director & shareholder, what will be the violation of Comapnies act 1956 , setion 3(1)

Please clarify

Thanks

Abhijit

 
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Company Secretary and Compliance Officer

Originally posted by : Abhijit Dey

Dear Ankurji ,

If any company taken any unsecured loan from outsider apart from director & shareholder, what will be the violation of Comapnies act 1956 , setion 3(1)

Please clarify

Thanks

Abhijit

 

If the company in question is a private company then such acceptance form outsider would be considered as violation of section 3(1)(iii)(d).

 
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