Can a company take loan of rs 90lakh ?

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Can 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)

 

 

Replies (1)

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

  1. Pass a resolution at the GM of the Company
  2. State the total amounts upto which the moneys are to be borrowed
  3. The names of the organization from which money is required to be borrowed.
  4. Enter the particulars in the register required to be maintained regards the amounts of the loans to be borrowed & the names of the institutions from where money is borrowed.


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