what are the consequences, If a private limited Co. already provides loan to a relative of a director.
Hope for a positive reply
Section 185
As per the provision of Section 185 of the Companies Act, 2013-
No Company shall directly or indirectly give loan to any of its directors or any other person in whom the director is interested, or provide any guarantee or security in connection with the loan taken by him or other person.
Further, Ministry had exempted the private companies from the applicability of Section 185 of the Companies Act, 2013 vide its notificationdated 05.06.2015
Subject to fulfillment of following conditions-
i. No body corporate should have invested in the Share Capital of the Company,
ii. The borrowing of such company from bank and financial institutions or any other body corporates is not equal to or more than twice of its paid-up share capital or INR 50 Crore, whichever is less, and
iii. No default has been made in the repayment of such borrowings which are subsisting at the time of making transaction under this section.
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