whether a unlisted public limited co. can accept unsecured loans from its directors and members ?
Plz tell me the section also.
I know that sec. 58 A is applicable as well as the Companies (Acceptance of Deposits) Rules, 1975 is applicable, but i m not clear what sub clause ix of rule 2 says.
Is it exempting directors, relatives or members of private co. only or of any co.
14 July 2024
Yes, an unlisted public limited company can accept unsecured loans from its directors and members under certain conditions as per the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014. Here’s the relevant information:
### Section 58A of the Companies Act, 2013:
Section 58A deals with acceptance of deposits by companies and provides provisions for acceptance of unsecured loans by companies, including public companies.
- **Applicability**: This section allows a company to accept unsecured loans from its directors and members subject to compliance with the conditions specified in the law and rules.
### Companies (Acceptance of Deposits) Rules, 2014:
- **Rule 2(ix)**: This rule defines certain exclusions or exemptions from the definition of "deposit" under the rules. Specifically, Rule 2(ix) states that deposits do not include amounts received from directors, relatives of directors, or members of private companies.
- **Applicability to Public Companies**: While Rule 2(ix) explicitly mentions private companies, similar principles are often applied to public companies as well, especially unlisted public companies.
### Conditions to Accept Unsecured Loans:
1. **Board Approval**: The acceptance of unsecured loans from directors and members must be approved by the Board of Directors of the company.
2. **Shareholder Approval**: In certain cases, depending on the amount and terms of the loan, shareholder approval may be required by passing a special resolution in a general meeting.
3. **Conditions under Section 58A**: Compliance with the specific conditions under Section 58A of the Companies Act, 2013, which include filing of a return of deposits with the Registrar of Companies (RoC) and maintaining the prescribed books of accounts.
### Exemption for Directors and Relatives:
- The exemption under Rule 2(ix) of the Companies (Acceptance of Deposits) Rules, 2014, primarily pertains to private companies. However, in practice, similar exemptions are often extended to unlisted public companies for loans received from directors, relatives, or members, provided they are not treated as public deposits.
### Conclusion:
Unlisted public limited companies can accept unsecured loans from their directors and members, subject to compliance with Section 58A of the Companies Act, 2013, and the rules framed thereunder. While specific exemptions under Rule 2(ix) primarily mention private companies, similar principles may apply to unlisted public companies. It is advisable to consult with a legal advisor or company secretary to ensure proper compliance with all regulatory requirements before accepting such loans.
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