26 August 2010
For the provisions relating to loan to director kindly refer section 295. For giving loan to director previous approval of central govt. is required.
Section 295 is not applicable to a private company.
26 August 2010
Public ltd. co. can not advance loan to director except prior approval of central govt. is taken or which is in relation to oridinery course of business of the co. (Sec. 295)
This sec. doesn't apply to pvt. ltd. co.
Consequences: every person who is knowingly a party to such transaction is liable to fine up to Rs. 50,000 or imprisionment upto 6 months. Loan should be repaid by every liable person.. Director is liable to vacate office u/s 283
26 August 2010
Your hearsay is correct as per section 2(22(e) of the income tax act,1961 is concerned. However, here also it is applicable to private limited company's. N.B:- Though the query is related to corporate law, the above view is expressed to clear the hearsay.
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