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Section 185 of the Companies Act strictly prohibits a company from advancing any loan, directly or indirectly, to any of its directors. So, strictly speaking, no, a private company cannot give a loan to it directors. However, the Ministry of Corporate Affairs, by an exemption notification has removed this restriction over private companies provided th...
Wazzeer Professional Network
ProfessionalCan a private company give a loan to its own directors?
-
Wazzeer Professional Network
ProfessionalSection 185 of the Companies Act strictly prohibits a company from advancing any loan, directly or indirectly, to any of its directors. So, strictly speaking, no, a private company cannot give a loan to it directors. However, the Ministry of Corporate Affairs, by an exemption notification has removed this restriction over private companies provided the following conditions are satisfied:
- No body corporate has invested in the share capital of the company.
- Borrowings is less than twice the paid-up capital or 50 crores, whichever is lower.
There are no defaults in the repayment of borrowings at the time of giving a loan to the director.
about 3 years ago
View answer
Can a private company give a loan to its own directors?
-
Wazzeer Professional Network
ProfessionalSection 185 of the Companies Act strictly prohibits a company from advancing any loan, directly or indirectly, to any of its directors. So, strictly speaking, no, a private company cannot give a loan to it directors. However, the Ministry of Corporate Affairs, by an exemption notification has removed this restriction over private companies provided the following conditions are satisfied:
- No body corporate has invested in the share capital of the company.
- Borrowings is less than twice the paid-up capital or 50 crores, whichever is lower.
There are no defaults in the repayment of borrowings at the time of giving a loan to the director.
about 3 years ago
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