Can Director take any personel advance or Loan from own Private company?
2 Replies
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 24 June 2010
YES in case of a private company the same is possible.
The transaction is governed by section 295 i.e. Loan to Director in case of a Public Company. A public company cannot give loan to its director without prior approval from Central Govt.
However section 295 is not applicable to a private company by virtue of section 295(2)(a)(i).
Thanks
(Guest)
In that case the Company has to give the valid reason as to why the Money is advanced to the Director, though any Section is not applicable
Because though He is the sole owner of the Company, Government has given certain Exemption to the Companies, Just because the Private Company do the business in the general business prudence and
To act as that Shareholder and/or Director are different person than Company, And
To take that much care that, One Should take while granting the Loan/Advance to other Person i.e. Unknown person.
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Ankur Shah (Practicing Company Secretary)
Ahmedabad, Gujarat - 380015
Mobile: +91-90330 03922, 94276 33901
E-Mail: ankur @ csankur.com
Website: www.csankur.com
Blog: www.csankur.blogspot.com
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