SACHINVERMA (CS) (79 Points)
08 April 2014Plz solve this query
If a company whether public or private want to raise fund through loan form HUF or Individual,
Is this possible or prohibited?
which section according to new companies Act 2013 and old companies Act 1956 will be effective?
please mention the Key points regarding this problem.
P C Agrawal
(Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad)
(8229 Points)
Replied 12 April 2014
Pl refer definition of 'deposit'. [Sec.2(31) of CA 2013 read with Rule 2 of Companies (Acceptance of Deposits) Rules 2014].
The Company Law Desk
(CA Practice )
(103 Points)
Replied 19 April 2014
Sir as per the definition of deposits it include all receipts of the money by way of loan. Thus whenever a private or public company receives any loan it will be considered as deposits.
However there are exemptions given from deposits as well and thus the loans from the following persons can be taken freely.
It has been notified in the rules that the Company can take any amount of loans from the directors and same are exempt from the definition of deposits.
A private Company and a public Company can raise loans from their members, However they have to follow the prescribed procedure as per Rules, Section 73 & Section 74 of the Company Act 2013.
A private Company apart from its directors and members cannot raise deposits from any other person until the same in the course of normal business of Company.
However a public Company is entitled to raise deposits from public but it has to follow the provisions prescribed in this regard.
Hope your query is addressed well.
For further queries & clarifications visit www.thecompanydesk.webatu.com
Or write us at thecompanydesk @ gmail.com
The Company Law Desk
P C Agrawal
(Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad)
(8229 Points)
Replied 19 April 2014
Pl do not circulate incorrect information. Under CA 2013 loan from members is no more exempt from definition of 'deposits' and hence no company (whether private or public) can accept deposit from its members. Section 74 only provides for refund of deposits accepted under CA 1956 and outstanding as on 31.3.2014.
The Company Law Desk
(CA Practice )
(103 Points)
Replied 19 April 2014
Respected Mr PC Agarwal
From Where have you read in our reply that deposits taken by a Company from its members are exempt. We have only said that the deposits from directors are exempt.
Also a Company may raise deposits from its members provided it follow the procedure as given in rules and Sec 73. The same is as under for your reference:
Earlier the deposits taken by a Private Company from its members were exempted from the definition of Deposits. But now a private company has to fulfill requirements, after which it will be able to accept deposits from its members.
(Cap At least 20,000/- per depositor)
Thus as said earlier a Company can accept deposits from its members provided the above procedure is followed and deposits from directors are exempt.
Also Mr. Agarwal, we at the Company Law desk are competant enough to handle the basic provisions of the Company Act 2013. We respect you & Request you to please dont involve us in useless issues created by you.
P C Agrawal
(Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad)
(8229 Points)
Replied 19 April 2014
Respected Mr. ________ (Pl give your name),
I am reproducing below text from your own mail:
"A private Company apart from its directors and members cannot raise deposits from any other person until the same in the course of normal business of Company."
The procedure mentioned in Sec.73 for acceptance of deposits from members is very non-practical and hardly any private co. will be able to follow this in view of cost involved.
My only submission is that this process should have been highlighted before advising for acceptance of deposits from members, which is a new provision in this Act. It is not freely acceptable as under old Act.
Thanks for going through my useless comments.
Best regards,
The Company Law Desk
(CA Practice )
(103 Points)
Replied 19 April 2014
Pawan Mittal
(CA Final)
(711 Points)
Replied 12 May 2014
With due respect to Sir P C Agrawalji, and M/s The Company Law Desk, “hence no company (whether private or public) can accept deposit from its members.” I want to get it corrected
“hence no company (whether private or public) except a private non-banking finance company can accept deposit from its members.” If I am wrong, please comment and correct again.
Pawan Mittal
(CA Final)
(711 Points)
Replied 12 May 2014
Respected Sirs,
Even if I am right, please confirm it. Because only on your confirmations, I will be assured, that I am right, untill then there will be position of confusion, whether I am right or not.
Pawan Mittal
(CA Final)
(711 Points)
Replied 21 October 2019
Respected Sirs,
please guide whether a private company can 1. take loan from huf
2. whether huf is relative of director, if director is a member of huf.
3. whether huf can be a shareholder itself and can give to private limited in its own name ?
Please guide what is the law regarding Huf to be made shareholder and loan to be taken from it.
Thanks with regards
CAclubindia
