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Existing loans from shareholders to be refunded - important

P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)

04 April 2014

Companies Act 2013 prohibits companies from taking loans from shareholders in normal course. Such loans will now be treated as 'deposits' and Companies (Acceptance of Deposits) Rules 2014 will apply to the same. Section 73(2) provides for stringent conditions for such loans.

Section 74 provides that such loans have to be refunded within a period of one year, i.e. latest by 31.3.2015. A return has also to be filed with ROC giving details of such loans by 30.6.2014. This is applicable to all companies - wither private or public.

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13 Replies

Sneha (Company Secretary) (1594 Points)
Replied 04 April 2014

In this scenario, Private Companies cant take loan from anyone except for its Directors ?? How will pvt companies work then widout funds.

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P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 04 April 2014

Our new Act is treating private companies at par with big MNCs ignoring ground realities and Indian conditions in which they are operating. Private companies are going to get so many shocks under the Act since several exemptions hitherto enjoyed by such companies have been withdrawn.

P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 04 April 2014

As per Sec.74(3) [which by grace of God has not yet been notified] penalty for non-compliance of the Section can go upto Rs.10 crores and officer who is in default can be punished with imprisonment which may extend to 7 years or with fine which will not be less than Rs.25 lacs but can go upto Rs.2 crores or both!

Sneha (Company Secretary) (1594 Points)
Replied 04 April 2014

Sir, as per my understanding public company can take unsecured loans from other corporates (in compliance with sec - 180 and Sec - 185 of Cos Act 13. and pvt company cant take unsecured loan from any other company. Pls rectify me if I am wrong. Your guidance mean a lot me.

anonymous II (director) (60 Points)
Replied 14 May 2014

Respected Sirs,

Companies Act 2013 prohibits companies from taking loans from shareholders in normal course. ....This is applicable to all companies - wither private or public. Whether this is also applicable to private non banking finance company? Please guide.

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Vandana J Doshi (Practising Company Secretary) (12562 Points)
Replied 14 May 2014

Hi Sneha,

even private companies can take unseured loans from other unrelated corporates i.e.after complying with sec - 180 and Sec - 185 of Cos Act 13.....

Vandana J Doshi (Practising Company Secretary) (12562 Points)
Replied 14 May 2014

HI Anonymous,

As per my understanding, NBFCs registered with RBI are specifically exempted from Desposits rules....they however will have to comply with section 180 of the Companies Act 2013

P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 14 May 2014

Any amount received by a company from any other company is not a deposit [Rule 2(1)(c)(vi)].

anonymous II (director) (60 Points)
Replied 14 May 2014

Respected Sirs,

Thanks a lot for attending my query, in another words, it can be said that section 73(2) is not applicable to private non banking finance company taking loan from its shareholders.

Is there any limit u/s 180. (1) © upto which extent permission can be given by special resolution?
Your guide a lot for me.

Sneha (Company Secretary) (1594 Points)
Replied 06 June 2014

Thank you Agarwal sir and vandana..

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Vishal (business) (78 Points)
Replied 06 June 2014

Dear All

Please let me know if loan taken from directors who are also shareholders and relative of directors in an unlisted public co. also have to be refunded within one year.

Thanks