Dear friends Please tell me that a director of pvt. Ltd. Co. (shareholder) can take loan from company if yes than what are the rules and same for limited company?
2 Replies
Sweety Rai
(Nil)
(61 Points)
Replied 03 November 2011
section 295 is not applicable to private company.
A private company can give loan( interest/ interest free loan) to it's directors, please
check the articles and if the articles allow such loan then yes you can go
ahead with that otherwise you required to alter the articles to give effect.
reuired to follow sec.295 of co. act1956 for laon from public co to its directors.
Other members can give contrary views in this matter.
G.L.Subhramanian
(PCS)
(206 Points)
Replied 03 November 2011
Hi Pankaj
There is no bar under the Companies Act for both private and public companies to give loan to shareholders.
Check the Memorandum and Articles of the company whether the same can be done.
[Section 295 talks about loan to directors. For private company, there is exemption. For public company, previous approval of the central government is required]
Check the concept of deemed dividend.
Regards,
Subbu
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