Can huf be made a shareholder and grant loan to a pvt ltd?

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A K Jain (Querist)
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27 March 2016 Hi.
Can a HUF can be made a shareholder in a Pvt Ltd company and then give a loan to the said Pvt Ltd Company.
Also, in this specific case, the Karta of the HUF is also the Managing Director of the said Pvt Ltd Company.
It would be great if some one could give a detailed explanation rather than a Yes or No answer. Thanks.

Mandar

Mandar (Expert)
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31 March 2016 My view on your query :-

• Can a HUF can be made a shareholder in a Pvt Ltd company
Yes, Reference Section 3 of Companies Act & Definition of Person as Section 2(31) of Income Tax Act
• then give a loan to the said Pvt. Ltd Company.
Yes, Notification Dated June 5, 2015 the company can accept 100% of (Paid up capital+ Free Reserves) without fulfilling the conditions mentioned in sec 73(2) clause (a) to (e)
• Also, in this specific case, the Karta of the HUF is also the Managing Director of the said Pvt Ltd Company.
Yes, Notification dated September 15, 2015 unsecured loans apart from director also from a relative of Director provided that relative of director 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 loans or deposits from others and the company shall disclose the details of money so accepted in the Board’s report. The relative need not be a shareholder of the company.