If a director of a pvt ltd company gives loan to company by using his Bank Overdraft facility and company repays the money on same day or next day, what consequences should be under Companies (Acceptance of Deposit) Rules, 1975 ??
18 Replies
CA. Prabudh Sharma
(CA)
(83 Points)
Replied 03 November 2009
it takes the nature of deposits
It's equivalent to a pvt. co. accepting a deposit straightaway.
Contrary views welcome
Lalit
(accounts)
(195 Points)
Replied 04 November 2009
And if director gives false statement in written that this loan was made by him out of his funds and the same are not borrowed, then what will be consequences for the company and for director???
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 04 November 2009
LOAN FROM INDIVIDUALS/OUTSIDERS
Kindly appreciate, A private limited company can take unsecured loan from its shareholders, directors and their relatives and the same would not be covered under section 58A and other deposit provisions as such transaction is exempt by deposit rules 1975.
But if a private company take unsecured loans from persons other than its shareholders, directors and their relatives the same would be considered as deposit under section 58A read with Companies (Acceptance of Public Deposit) Rules, 1975.
Regards
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 04 November 2009
So Lalit there is no need to worry...
Lalit
(accounts)
(195 Points)
Replied 04 November 2009
CA. Prabudh Sharma
(CA)
(83 Points)
Replied 04 November 2009
But Rule 2 (b) defines deposits as:
|
(b) |
"deposit" means any deposit of money with, and includes any amount borrowed by, a company, but does not include- |
|
(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; |
Pl. comment.
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 05 November 2009
Read my first reply carefully.
CA. Prabudh Sharma
(CA)
(83 Points)
Replied 05 November 2009
Sorry Sir,
But I am unable to understand.
The amt. recd by a pvt. ltd. co. from its shareholders/directors shall not be considered a deposit subject to the condition that it has NOT been borrowed by him/her in his/her own capacity from some one else.
If the money is found to have been borrowed by the sh'holder/director and then lent to the pvt ltd. co., the amount given to the co. shall lose the exemption of not being called a deposit and hence shall(should) be considered a deposit.
Pl. explain in detail.
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 05 November 2009
Why are you first focusing on proviso. I understand this condition is very important but at the same time this condition is very easy to maintain. If you are answering query then first mention the main provision. Fulfillment of condition is the responsibility of other person.
In my first reply i mentioned the concerned rule i.e. Rules 1975, then he may take reference from there only.
CA. Prabudh Sharma
(CA)
(83 Points)
Replied 05 November 2009
From the valuable discussion on the forum, I have understood that:
The director/sh'holder may lend to the co. declaring that these are his own funds. The responsibility of the co. is over once the said declaration is available with the co.
It is the director/sh'holder who is at fault and not the co.
Hoping, its true...
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 05 November 2009
Superb.
Now your understanding is absolutely right and on the right track.
Lalit
(accounts)
(195 Points)
Replied 09 November 2009
And what are consequences for director if he / she gives such wrong declaration??
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 09 November 2009
For giving wrong declaration they may be prosecuted under the civil law of country.
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