Mortgage of Company Assets

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Nandu (Querist)
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27 September 2010 Can a PRIVATE LIMITED company Mortgage/pledge its Asset(to someone other than bank) and give loan (with that proceedings) to one of its Director as Loan??
is there any restriction under Company law, if so please specify with section numbers..

Ankur Garg

Ankur Garg (Expert)
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27 September 2010 In case of a public company loan to director is governed by section 295 and you have to obtain previous approval of central govt before providing loan assistance to the director.

In case of a private company it is all right to give loan to director because section 295 is not applicable to a private company. For this you have to pass a board resolution before providing loan assistance to director. No need to charge company’s assets bcoz company is giving loan and not taking any assistance.

Regards