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Loan to Pvt. Ltd.Co., by Director

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(Querist)
09 July 2011 Dear Sir,

Can Directors give a loan (on interest) to a Pvt. Ltd. Co. in which they are directors ?

thanks
anckoora
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CA Navin Jain

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CA Navin Jain (Expert)
09 July 2011 yes, pvt ltd company can taken unsecured loan from directors and their relatives
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Aditya Maheshwari

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Aditya Maheshwari (Expert)
09 July 2011 yes the directors can give but the interest rate should be as per prevailing market rates.
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anckoora

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anckoora (Querist)
09 July 2011 But sir, they are taking remuneration from that pvt. ltd. co. In this case also, they can give unsecured loan to co ??

anckoora
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CA Navin Jain

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CA Navin Jain (Expert)
09 July 2011 yes, if director getting remuneration from company then he also give unsecured loan to company
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Bhaskaran Chackrapani Warrier

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Bhaskaran Chackrapani Warrier (Expert)
09 July 2011 The company should obtain a confirmatory letter also from the director concerned, stating that the money lent to the company is not borrowed by him/her. This is for the compliance of the Companies Act,1956.

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