Loan to director

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

12 September 2016 A pvt. company has given a loan to director, does it require a disclosure in directors report in the point "particulars of loans, guarantees or investments under section 186".

Is there any limit for advancing a loan to directors and person whom he is interested??

Pratik Shah

Pratik Shah (Expert)
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12 September 2016 Pursuant to Section 185, a company can not advance loan to directors or related parties (as specified). However, on 15th June, 2015, MCA issued a notification wherein an exemption was provided to Private limited company in this regard.
As per this exemption, if the company is fulfilling few conditions, section 185 does not applicable to such pvt company. Kindly refer this notification.

With regard to your question, you need to disclosure such details (loan to directors) in Directors Report with regard to Section 186.