03 September 2013
PLEASE SUGGEST WHETHER A PRIVATE LIMITED COMPANY ACCEPTS LOAN FROM A PUBLIC COMPANY. THERE IS A CASE WHERE A PRIVATE LIMITED COMPANY TAKES RS.26,50,000.00 FROM A LIMITED COMPANY AND SHOWS IT AS A SUNDRY CREDITORS IN WHICH NO TRANSACTIONS IN THIS NATURE WERE TAKING PLACE. IS IT PERMISSIBLE OR NOT. WHAT IS ITS TREATMENT. PLEASE, RESOLVE IT IT IS URGENT.
If such other company is a group company or under same management then private company can take a loan from public company under section 372A of the Companies Act, 1956.
03 September 2013
This kind of transaction is covered under section 372A being in the nature of inter corporate loan. Such transaction is allowed subject to related party disclosures and interest on prevailing market rates. I would suggest you to go through section 372A(8).
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