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Borrowing power under new companies act 2013

Piyush Sancheti (HEAD TAXATION CHEMICAL MFG CO) (307 Points)

11 March 2014

Dear Friends,

if suppose XYZ private ltd company going to take unsecured loan of Rs.50Lacs,

whether any (at Board/EGM) special or ordinary resolution required to be passed. any other compliances please specify relevant to new companies act 2013

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6 Replies

P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 14 March 2014

1) Special resolution u/s 180(1)(c) of CA 2013 if borrowing exceeds paid up capital & free reserves. Otherwise only Board resolution.

2) Board resolution only at Board meeting and not by circulation - Sec.292(1)(c) of CA 1956.

3) Borrow only from director, his relative or member of company against declaration that the money is not being given out of borrowed funds [Rule 2(b)(ix) of Companies (Acceptance of Deposits) Rules 1975] or from promoters as per stipulations of financial institutions [Rule 2(b)(xi) of said Rules].

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Piyush Sancheti (HEAD TAXATION CHEMICAL MFG CO) (307 Points)
Replied 16 March 2014

Thanks Agrawal Sir,

but if fund borrowed from third party who is not relative, director or not having any substantial interest. & total Fund borrowed & going to borrow Exceeds Paid up capital & Free reserve then ?

please answer if in case of Private ltd co only

P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 16 March 2014

Private company cannot accept loan from any person other than director, his relative or member. It will be violation of Sec.58A of CA 1956 and penal provisions will get attracted.

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