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Unsecured loan between two pvt. companies

CA. Naveen Bhat (CA) (175 Points)

09 May 2013

What provisions are applicable for unsecured loan between two private ltd company having common directors?

Will Section 58A apply?

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4 Replies

VIKAS.A (SOMETHING IS BETTER THAN NOTHING) (1095 Points)
Replied 09 May 2013

For Inter-corporate loans sec58a is not applicable, any way wait for others to reply.

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CA. Naveen Bhat (CA) (175 Points)
Replied 09 May 2013

I agree section 58A will not be applicable however Section 372A is also not aplicable to private limited company

Sneha (Company Secretary) (1594 Points)
Replied 09 May 2013

If common directors are interested in the said company then disclosure u/s 299 is required. Further disclosure is required to be made under related party transaction in the balance sheet.

P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 21 May 2013

Section 58A will not apply since inter-corporate deposits are excluded from the definition of 'deposits'. Refer Rule 2(b)(iv) of Companies (Acceptance of Deposits) Rules 1975.