CHANDAN KUMAR SHAW (ASST MANAGER - ACCOUNTS AND FINANCE) (44 Points)
21 November 2011Can a company take loan of rs 110 lakh(1Crore 10 lakh) ?
the Autorised Capital of the Company 10lakh.
Actually Dis is a new Company with Authorised Capital of 10 lakh , the Company wants to purchase a Land of Value Rs 1 Crore 20 Lakh..... Can Company take loan of Rs1Crore 10 lakh From Directors . Please Suggest Me.....
If Yes then what is the procedure .?
Chandan Kumar Shaw (CA final student)
Giridhar S Karandikar
(Team Lead)
(7548 Points)
Replied 06 December 2011
You have not provided the figures of paid-up share capital of your company. Is the paid-up share capital equal to the Authorized Capital.
As per the provision of Section 293(1) (d) of the Companies Act, the directors of the without the consent of the shareholders in the general meeting of the company cannot borrow moneys if the money to be borrowed together with the money already borrowed exceeds aggregarate of the paid-up share capital & free reserves. The relevant provisions of the said section are as follows:
293. Restrictions on powers of Board.—(1) The Board of directors of a
public company, or of a private company which is a subsidiary of a public
company, shall not, except with the consent of such public company or
subsidiary in general meeting,—
(d) borrow moneys after the commencement of this Act, where the moneys
to be borrowed, together with the moneys already borrowed by the
company (apart from temporary loans obtained from the company's
bankers in the ordinary course of business), will exceed the aggregate of
the paid-up capital of the company and its free reserves, that is to say,
reserves not set apart for any specific purpose;
Explanation(1) to the said section lays down the procedure:
Explanation I.—Every resolution passed by the company in general
meeting in relation to the exercise of the power referred to in clause (d) or in
clause (e) shall specify the total amount up to which moneys may be borrowed by
the Board of directors under clause (d).
In short the company will have to follow the below procedure
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