Loans from directors

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

06 May 2015 Dear Experts,

Mr. 'A' is a Whole Time Director of a private limited company. He also happens to be a shareholder and also an employee of the same company. Mr. 'A' provided a Loan to the company. Mr. 'A', the director gives an undertaking that the loan is not provided out of borrowed funds in order to stay out of the purview of the definition of Deposits. The Borrowing is well within the limits u/s 180(1)(c).

Now the Query:

1. Can Mr. 'A' provide loan to the company being a Director,shareholder and employee of the same company?

2. If yes, is there any Limit for the same?

3. What are the compliance requirements in this respect under the Companies Act,2013?

CS JAY GOHIL

CS JAY GOHIL (Expert)
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06 May 2015 1. mr A can give loan to company. further loan to company from director by owned funds are 100% allow with out any limits.

2. No compliance required for the same. basically it has been mentioned in form AOC - 2 i.e. it is a related party transaction and also same to be mentioned in audit report of co.