Relative of Directors

This query is : Resolved

CS Vandana Kacholia (Querist)
Follow

02 July 2009 If Loans taken from relatives, is it necessary to make them shareholder of the company?? plz give reference of applicable section.

Thanks & Regards
Vandana

Ankur Garg

Ankur Garg (Expert)
Follow

02 July 2009 Hi Vandana,

No.

It is not necessary at all to make them shareholder of the company.

In books of accounts they should be treated as creditors.

I don't think there is any section in company act which deals with such case specifically.

Best Regards

CA Nitin Wadhwani

CA Nitin Wadhwani (Expert)
Follow

02 July 2009 In a private loan can be taken from shareholders, directors and their relatives.

If loan is taken from any other person, the company becomes a public company on violation of Sec.3(1)(iii).

Upgrade to CAclubindia Pro. Subscribe Now!