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Loan From Director

Prabhudevaru (Article) (105 Points)

08 February 2011

Can anyone tell that what are the procedures to be followed to obtain a loan form Director or repay the same to him in a public limited company

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7 Replies

Jayashree S Iyer (Company Secretary) (3224 Points)
Replied 08 February 2011

Hold a Board Meeting and record the transactions viz., taking and repaying of loan from director. The director should make a disclosure u/s.299 of the Companies Act, 1956 and entries must be made in the Register maintained u/s.301. Ensure that the interest on the loan is reasonable.

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nidhigoel89 (Company Secretary ) (594 Points)
Replied 08 February 2011

Hello!

I agreed, just hold the BM and pass the necessary resolution regarding to loan from directors.......ensure the compliances as notifies above.................

Regards

Nidhi

cs ashwini kumar (Company Secretary in Practice) (173 Points)
Replied 08 February 2011

Hi,

apart from the procedure stated herein above by the other experts, please also follow the provisions stated in the proviso to the Rule 2(b)(ix) of The Companies (Acceptance of Deposits) Rules, 1975, which is as under:

"Provided that the director, relative of a director or member, as the case may be, from whom money is received, furnishes to the company at the time of giving the money, a declaration in writing to the effect that the amount is not being given out of funds acquired by him by borrowing or accepting from others"

best regards

CS Ashwini Kumar

Jayashree S Iyer (Company Secretary) (3224 Points)
Replied 08 February 2011

Thanks Ashwini.

SANTOSH SHAH (Company Secretary) (754 Points)
Replied 10 February 2011

Originally posted by : cs ashwini kumar
	Hi, apart from the procedure stated herein above by the other experts, please also follow the provisions stated in the proviso to the Rule 2(b)(ix) of The Companies (Acceptance of Deposits) Rules, 1975, which is as under: "Provided that the director, relative of a director or member, as the case may be, from whom money is received, furnishes to the company at the time of giving the money, a declaration in writing to the effect that the amount is not being given out of funds acquired by him by borrowing or accepting from others" best regards CS Ashwini Kumar

Hi Ashwini,

I guess Rule 2(b)(ix) of the Companies ( Acceptance of Deposits) Rules 1975, is applicable only to private ltd and not to public limited. Here Prabhu's case is of public limited company. so the rule may not be applicable.

(ix)

any amount received by a private company from a person who, at the time of the receipt of the amount, was a director, relative of director or member: Provided that the director or member, as the case may be, from whom money is received, furnishes to the company at the time of giving the money, a declaration in writing to the effect that the amount is not being given out of funds acquired by him by borrowing or accepting from others;

correct me if i am wrong. regards - Santosh Shah

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cs ashwini kumar (Company Secretary in Practice) (173 Points)
Replied 10 February 2011

Dear Mr. Santosh Shah,

Request you to go through the correct Rules on acceptance of deposits [ please refere "Companies (Acceptance of Deposits) (Amendment) Rules, 2004, w.e.f. 12-3-2004 vide GSR 189(E), dated 12-3-2004"]

Best Regards

CS Ashwini Kumar

SANTOSH SHAH (Company Secretary) (754 Points)
Replied 10 February 2011

Originally posted by : cs ashwini kumar
	Dear Mr. Santosh Shah, Request you to go through the correct Rules on acceptance of deposits [ please refere "Companies (Acceptance of Deposits) (Amendment) Rules, 2004, w.e.f. 12-3-2004 vide GSR 189(E), dated 12-3-2004"] Best Regards CS Ashwini Kumar