What to do to stop managing director to get more loans

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

14 January 2011 1. Is it possible for managing Director of a company who is holding 50% share of a pvt ltd to get loans from bank without the knowledge or agreement of another partner who is also 50% share holder but not an active partner ?

2. How to stop the managing director from getting more loans from another banks which make company's liability increasing and can lead to bankruptcy ?

CS Taher

CS Taher (Expert)
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15 January 2011 Managing Director can get loan in his name, but Managing Director cannot take loan in Company name without other director sanctioning it or all the director must sanction the loan if the manager or secretary is the authorised person for signing the loan documents.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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15 January 2011 In the absence of a resolution in the Board Meeting, bankers are not supposed to sanction loan to the Pvt Ltd Co.

It will be better, for the another director as well as the company, to be active, and inform the bankers, not to exceed the limits already sanctioned.

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CS Taher

CS Taher (Expert)
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15 January 2011 Agree with Mr Paras..

Querist : Anonymous

Querist : Anonymous (Querist)

15 January 2011 Thanks. Mr CS Taher and Mr. Paras Bafna. But the reality is that Managing Director already got many loans from different banks by forged signature or by some other ways.

Is there any way for another Director to stop bank operation. As land, machinery and material are under collateral. Should he send letter to the bank for stopping operation ? And if it is Yes then what should be the content of the letter