Loan or Advance to Director by a private Ltd Co

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sidharth kr jain (Querist)
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06 March 2010 Can a Private limited company can give loan or advane to its Director or his Proprietorship Firm. Paid Up Capital 10 Lakhs, Reserve & Surplus (Premium) 100 lakh, Willing to Provide loan or advance of 50 Lakh to its Director or his proprietorship firm for 1 year period. Let me make it clear that the company does not have accumulated profit and do have reserve & surplus from share premium. Will that be taken as deemed dividend

Rasesh

Rasesh (Expert)
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08 March 2010 If the Director holds more than 10% of the total voting powers in the private limited company.

However, Sectio 295 of Companies ACt would be applicable and central govt approval is required.