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Unsecured loan from pvt ltd

nitin bagadia (employee) (36 Points)

09 September 2012

can a pvt ltd company give loan to any individual person ... to earn interest

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6 Replies

CA D R P (Chartered Accountant) (313 Points)
Replied 09 September 2012

"To earn interest" if u are giving loan then your objective of business has to be checked.

A PVT LTD CAN GIVE SUCH LOANS .. BUT IT SHOULD BE IN IT'S ARTICLES OF ASSOCIATION TO GIVE LOANS TO EARN INTEREST OUT OF EXCESS LIQUIDITY. IT'S LIKE INVESTMENT ONLY....

THANK YOU,

DRP

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financehub (MBA) (27 Points)
Replied 09 September 2012

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Muthukumar (Chartered Accountant) (78 Points)
Replied 09 September 2012

Yes you can...provided that transaction is not a sham transaction and if the individual is the director of the company... be careful with the deemed dividend provisions in the hands of the directors...

nitin bagadia (employee) (36 Points)
Replied 09 September 2012

thanks for the responses..... but muthukumar this is to individuals other than directors share holders and. related parties....... so i can assume it is allowed

Sunil (Internal Auditor) (334 Points)
Replied 10 September 2012

3 things has to be analysed in the question. One is its object clause. Two whether there is any restriction in the Money Lending Act and three whether the provision of NBFC is applicable. Initially it should be analysed whether the articles included such an object clause. Then it should be verified any restriction in money lenders or other similar acts. Then also check whether the provisions of NBFC will attract or not