Good day to one and all. Can a private ltd company give unsecured loans / unsecured investments to another Private ltd company.In such case what are all the procedures to be followed. What is the maximum time frame the loan can be granted. What can be the interest percentage. Can anyone clarify.
Regards Rajkumar 9843141264
Section 372(A) of companies act, 1956
Its better to have an agreement with important clauses viz., Interest % (TDS applicable) ,duration & type/terms of repayment (in howmany instalments) so on for a safer side to get rid off any legal complication may arise if scrutiny comes.
Yes... of course..!!! Pvt. companies can give loans to each other.. there is no bar..! Nor there is any bar on the limit or interest unless it is charged at an arms length price.
Simply pass resolution to that effect.
Dear Rajkumar,
A company registered under the provisions of the Companies act, 1956 may give loan to any other body corporate not exceeding 60% of its paid-up share capital and free reserves or hundred percent of its free reserves, whichever is more.
Procedure,
a. board resolution
b. pass special resolution
c. take approval of company's lenders
Duration time:
incorporate in the loan agreement all terms and conditions
Interest rate:
shall not be less than the interest rate prevailing bak rate.
Board resolution has to be passed at meeting of Board. 'Resolution by circulation' will not be applicable for sec 372(A) of Companies Act
Section 372A is not applicable to private companies as mentioned in 372A(8)(iii). It will only apply to private companies which are subsidiaries of a public company. So in your case the section is not applicable.
Section 372A is not applicable to private company. Hence subject to provisions of the Articles, Board resolution is sufficient for giving loans and making investment in shares of another private company. You have to just take care of Sec.14A of Income Tax Act if you are investing in shares out of borrowed funds since interest on loan may be disallowed in that case. There is no restriction on rate of interest. However, it should be reasonable at arms length basis.
Section 372(A) is not applicable to Private limited companies
limits are prescribed only to public companies u/s 186 of c.a 2013 no bar on pvt ltd companies...
Respected Sir
May you plz let me know which of the following transactions will be entered in the register maintained u/s 301 as per companies act 1956
1. loans taken by a private company from another private compnay.
2. loans taken by a private company from its directors and relatives and others
3. loans given by a private company to another company.
plz help its urgent
I will be thankful if u provide me the provisions regarding companies act 2013 too.
Thanking You
nidhi
Plz reply asap
If the said loan was not repaid in time as per agreement, should we classify it as loss asset.
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