unsecured loan from directors

This query is : Resolved

seema singla (Querist)
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19 November 2008 Can a Public Ltd Co. and a Pvt. Ltd CO. can take unsecured loans from its directors who are also the shareholders.
If yes, then upto what amount?
Further, can a public ltd co. and a pvt. ltd co. can advance loans to its directors. If yes, then upto what amount?
Please ans
Thanx

Ravikumar.G

Ravikumar.G (Expert)
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19 November 2008 Loan can be taken no limit.

Loan to directors - shall comply with sec 295 of the act.

Pvt company - Not applicable of sec 295.

any transaction represented by a book debt.

Ravikumar.G

Ravikumar.G (Expert)
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19 November 2008 as per sec 295 - Previous approval of CG is required in every case falling under this section.

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Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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19 November 2008 If a profit making private limited company give loan/advance to its directors provisions of section 2(22)(e) of the income tax act,1961 applies.

seema singla

seema singla (Querist)
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25 November 2008 Thanx for the answer
Further I want to know that loan to a director can be interest free or not in a pvt ltd company earning few profits.
Plz ans.
thanx.

chintan

chintan (Expert)
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17 December 2008 First of all Section 295 is not applicable to a private limited company.In my opinion interest free loan can be given to a director by a private ltd Co.