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Deposit acceptence of private company

CA. Arun Chacko (JAKS & Associates) (208 Points)

28 December 2010

dear all,

Is there any limit for a private company to accept loan from its directors?

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10 Replies

Jaideep (Service) (1368 Points)
Replied 28 December 2010

Nope...

Private Company can accept deposit form Directors and members of the Company.

Also 372A specifically exempt priavate companies which are not subsidary of public company.

Regards

Jaideep Pandya

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nidhigoel89 (Company Secretary ) (594 Points)
Replied 28 December 2010

Hello!

Totally agree with Jaideep.....there is no such limit prescribed in Act.......

Regards

Nidhi

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Charu (nil) (122 Points)
Replied 28 December 2010

No such limit under The Companies Act, but the Directors and the company may have to justify the quantum of Loan under the Taxation laws, if called upon to do so.

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(Guest)

as above said , i also agreed that .

there is no limit prescribed under companies act

Jayashree S Iyer (Company Secretary) (3224 Points)
Replied 28 December 2010

No such limit is prescribed under the Companies Act, 1956.

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Ajay Mishra (Company Secretary) (74337 Points)
Replied 28 December 2010

Dear Friend

1. Deposits in case of Private Limited Company

Private Company is prohibited to accept any invitation or acceptance of unsecured loans/deposits from the persons other than its members, directors or their relatives. Therefore a private company can accept deposits through private arrangement from its members, directors and their relatives.

Rule 2(b)(ix) exempt any unsecured loan money received from directors and shareholders from the definition of deposits. According to Rule 2(b)(ix), any amount received from members of a private company limited by guarantee are not exempt.

Rule 3 of Companies (Acceptance of Deposits) Rules, 1975 deal with the limit upto which a company can accept deposits/ loans.

For any invitation and acceptance of unsecured loan/deposits from relatives of directors and member, the company will have to file a statement in lieu of advertisement in accordance with the provisions of Rule 4A of the Companies (Acceptance of Deposits) Rules, 1975. The company will also have to file annual return of deposits in accordance with Rule 10.

2. Consequences of acceptance of deposit by Private Limited Company

If a private company acceptance an amount, which may be classified as deposit under section 58A read with Companies (Acceptance of Deposits) Rules, 1975, it will cease its status of a private company and has to make all the compliances for such deposits as per the requirement of said rules, as well as to comply with all the provisions as may be applicable on public limited company such as section 58A, 58AA, 58AAA, 81, 256, 257, 198, 268, 269, Schedule XIII, 274(i)(g), 295, 297, 300, 301, 372A, etc

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CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)
Replied 28 December 2010

Rule 2b(ix) exempt deposits accepted from directors of the Company Or Relative of Directors or a members of private Company.

In my opininion, private company can accept deposit, however it would not be treated as deposit and treated as unsecured loand and no limit would be applied.