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    Loan From Shareholders - Pvt Co

    Posted By : SHALU / Published on : 17-Aug-2021 01:05 PM / View : 157 / Comment : 1
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    Dear Learned Members,

    Pursuant to MCA notification dated 13th June 2017, can a pvt ltd co, now borrow to an unlimited extent from shareholders of the company..... Pls confirm....
    Read more on : shareholders loan

    •  

      Loans from

      Conditions, if any: 

      1

      Shareholder: 

      Member: Yes, can accept, but subject to the condition specified in deposit Rules***.
      Promoters & Their Relative: Yes, can accept if it is in the stipulation of the requirement of any lending Financial Institution (FI) or Bank. This Exemption is available till the loan is not repaid.

      2

      Director/Relatives of Director

      Yes, can accept, but the director will give a Declaration in writing that money is not given out of borrowed funds and the company will disclose it in the Board’s report.

      3

      Employee

      Yes, can accept  up to the employee’s annual salary ( there should be a contract of employment with the company) in the nature of non-interest-bearing security deposits.

      4

      Any other Individual 

      Can’t accept 

      5

      Proprietorship Firm ; 

      Can’t accept

      6

      HUF 

      Can’t accept

      7

      Partnership Firm 

      Can’t accept

      8

      Any Company 

      Yes, can accept, but also comply with Sec 186**  wherein the conditions are specified for the lender

      9

      Banks 

      Yes, can accept

      10

      Any other Financial Institution which are not incorporated as Banks ( eg. Religare, Fullerton, Barclays, Bajaj Finance)

      Yes, can accept

      11

      Trust

      Yes, can accept, but loan received should be non- interest bearing. 

      12

      Outside India

      Yes, can accept, but subject to the provisions of the Foreign Exchange Management Act, 1999 and rules and regulations made thereunder.

      13

      Govt.organisation ( eg. SIDBI)

      Yes, can accept

       

      Other points :

       

      For accepting the Loans/Deposits from above parties, a company has to follow the conditions laid down u/s 180(1)(c) which is:

      If Proposed +Existing borrowings (exclude temporary borrowings) > (paid up capital +Free Reserves +Securities Premium Account), the Company shall have to pass Special Resolution in General Meeting. But in case of private company – Section 180 shall not apply – Notification dated 5th june, 2015 provided that Interest of Shareholders must be protected.

         
      **Sec 186: A Company (Private or Public) can’t give loan to any person* or body corporate which is more than

      1.                    60% of its Paid up Capital + Free Reserves + Security Premium

                                                        Or

                           100% of Free Reserve + Security Premium

      If this limit is exceeded, prior approval by special resolution in general meeting is required. However, in case a loan or guarantee is given by a company to its wholly owned subsidiary company or a joint venture company than special resolution is not required.

      *the word “person” does not include any individual who is in the employment of the company.

      ***Deposit Rules: for acceptance of deposits from Members (including subscriber to MOA or shareholder:

        • Company can accept maximum 35% of (paid up capital + Free reserves +Securities Premium Account) – This limit is for existing and proposed deposits.

        • Company has to follow the procedure like issuance of circular, depositing insurance, credit rating, appointment of trustee etc.

        But after The Notification Companies (Acceptance of Deposits) Second Amendment Rules, 2017- Dated 19th September, 2017, a private company can accept 100% of (Paid up capital+ Free Reserves +Securities Premium) without fulfilling the conditions mentioned in sec 73(2) clause (a) to (e) i.e. issuance of circular, depositing insurance, credit rating, appointment of trustee etc. and such company shall file the details of monies so accepted to the Registrar in Form DPT-3.1. a private company which is a start-up, for five years from the date of its incorporation;

        2. a private company which fulfils all of the following conditions, namely:-

      1. i) which is not an associate or a subsidiary company of any other company;

        ii) the borrowings of such a company from banks or financial institutions or any body corporate is less than twice of its paid up share capital or fiffy crore rupees, whichever is less ; and

        iii) such a company has not defaulted in the repayment of such borrowings subsisting at the time of accepting deposits under section 73:

      2. Provided further that the maximum limit in respect of deposits to be accepted from members shall not apply to following classes of private companies, namely:-

      19-08-2021 / 07:25:03 AM
      Reply



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