Acceptance of loan from huf

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Querist : Anonymous

Querist : Anonymous (Querist)

18 August 2013 Can a PVT LTD company accept loan from HUF in which one its director is Karta or Member. If Yes, please provide with relevant information. Thanks in Advance.

Ajay Mishra

Ajay Mishra (Expert)
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18 August 2013 Hi

Yes, you can take.

Deposits from HUF
Acceptance of deposit by a private company from HUF:—
(a) If all members of HUF are also the directors of private company, such private company can accept deposits/unsecured loans from HUF. This case will be covered under rule 2(b)(ix) i.e. such a deposit is an exempted deposit.
(b) If all members of HUF are not the directors of a private company i.e. some of them are the partners and remaining are shareholders, still private company can accept unsecured loan/deposit from HUF. This case will be covered under rule 2(b)(ix) i.e. such a deposit is an exempted deposit.
(c) If there are some members of HUF who are not the shareholders of a private company, still private company can accept deposits from HUF. This case will not be covered under rule 2(b)(ix).

Kumar

Kumar (Expert)
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19 August 2013 I thought it cannot accept because

2(b)(ix) any amount received by a private company from a person who, at the time
of the receipt of the amount, was a director, relative of director or member

Can HUF be considered as a relative of the director

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Ajay Mishra

Ajay Mishra (Expert)
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19 August 2013 Dear Rajesh......

A public company or private company taking loan from its director will not be considered as deposit under Rule 2(b)(iX).

So company is free to take loan from directors.

Always HUF will be considered as relative of directors.

Kumar

Kumar (Expert)
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20 August 2013 Thank you Ajay.

On the same lines, I had the following understanding, kindly clarify of you think otherwise:

(a) Loan cannot be accepted from HUF of a member because Relative of only directors is covered

(b) Loan cannot be accepted from a firm / AOP where other partners / members are not members/directors/relative of directors in the Company.

Thanks in advance

Ajay Mishra

Ajay Mishra (Expert)
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20 August 2013
Acceptance of deposit by a private company from a partnership firm:—
(a) If all partners of the firm are also the directors of a private company, such private company can accept unsecured loans/deposits from the firm. This case will be covered under rule 2(b)(ix) i.e. such a deposit is an exempted deposit.
(b) If all partners of a firm are not the directors of a private company i.e. some of them are the directors and remaining are the shareholders, still private company can accept deposit from the firm.
(c) If all partners of a firm are not the directors of a private company i.e. some of them are the directors, some of them are shareholders and remaining are relatives of a partners who is a shareholder. This case is not covered under rule 2(b)(ix).
(d) Where some partners are directors in a private company and remaining partners are not their relatives, private company cannot accept deposits from such firm.

Ajay Mishra

Ajay Mishra (Expert)
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20 August 2013 Rule 2(B) (ix) of the the Companies (Acceptance of Deposits) Rule, 1975 is defind as follow:

“Any amount received by a private company from a person who at the time of the receipt of the amount, was a director, relative of director or member.”

In exercise of the powers conferred by Section 58A read with sub-clauses (a) and (b) of Sub-section (1) of Section 642 of the Companies Act, 1956 (1 of 1956), the Central Government, in consultation with the Reserve Bank of India, hereby makes the following rules further to amend the Companies (Acceptance of Deposits) Rules, 1975, namely:-

1 . Companies (Acceptance of Deposits) Amendment Rules, 2004.-

1.Short Title and Commencement - (1) These rules may be called the Companies (Acceptance of Deposits) Amendment Rules, 2004.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In rule 2 of the Companies (Acceptance of Deposits) Rules, 1975, in clause (b), for sub-clause (ix), the following sub-clause shall be substituted, namely:-

" (ix) any amount received from a person who, at the time of the receipt of the amount, was a director of the company or any amount received from a relative of a director or its member by a private company :

Provided that the director, relative of a director or member, as the case may be, from whom money is received, furnishes to the company at the time of giving the money, a declaration in writing to the effect that the amount is not being given out of funds acquired by him by borrowing or accepting from others".

After this amendments in this rule as on 12/03/2004 the public company can take money from its director because the word private company has been replace in this sub clause by the word “ the Company”.

Kumar

Kumar (Expert)
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20 August 2013 Thank you Ajay

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Ajay Mishra

Ajay Mishra (Expert)
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20 August 2013 My pleasure............

Kumar

Kumar (Expert)
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10 September 2013 Dear Ajay.

Need further help from you

In HUF if
- Karta is a shareholder in the Private Company
- but co-parceners in the HUF are not Shareholders in that company,

Can the company accept deposit from the said HUF

Rajesh

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Ajay Mishra

Ajay Mishra (Expert)
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10 September 2013 Yes, you can take loan from HUF and it will not be treated as deposit.

Ajay Mishra

Ajay Mishra (Expert)
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10 September 2013
Acceptance of deposit by a private company from HUF:—
(a) If all members of HUF are also the directors of private company, such private company can accept deposits/unsecured loans from HUF. This case will be covered under rule 2(b)(ix) i.e. such a deposit is an exempted deposit.
(b) If all members of HUF are not the directors of a private company i.e. some of them are the partners and remaining are shareholders, still private company can accept unsecured loan/deposit from HUF. This case will be covered under rule 2(b)(ix) i.e. such a deposit is an exempted deposit.
(c) If there are some members of HUF who are not the shareholders of a private company, still private company can accept deposits from HUF. This case will not be covered under rule 2(b)(ix).

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suresh

suresh (Expert)
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18 February 2015 Now as per new ammended Companies Act the whole senorita has changed. Now can a pvt. ltd. comp nay accept the loan or deposit from an HUF where in karta of an HUf and all members of an huf are the director and members of the company.