Dear Shibin,
Your question "Does a Company can take Loan from Director":
In continuation to my answer that I have given as “
“Nice to meet you. The answer to your question is as follows:
a) As said by Hitesh, It is correct that no company is entitled to make any loan or give a guarantee or provide security from / to its directors (in brief).
b) but the same will not be applicable in the following cases:
i) if the company is a private limited or
ii) the company obtains prior approval from the Central Government.
iii) if the company is a banking company.
iv) As far as the amount of loan, i dont think there any limit in the amount
of loan to be taken.
That is what section 295 speaks about.
Please find more elaborate explanation:
1. The explanation is made as per the provisions of section 295 as Mr. Hitesh said earlier.
2. But section 295 does not speak about the loans taken by the company from its directors, it only speaks about the loans the taken by the directors or its related parties for which he or such party takes loans from directors/company/ any other party.
3. A company can take a loan from its directors.
4. THE Department of Company Affairs, vide Notification No.1/17/01 CL V of September 25, 2001, brought in certain amendments to The Companies (Acceptance of Deposits) Rules, 1975. The Companies (Acceptance of Deposits) (Amendments) Rules, 2001 have recast Rule 2(b)(ix) and inserted new sub-clauses (ja) and (jb) in sub-rule (2) of Rule 4 in the context of protecting small depositors as also a new Rule 11A empowering regional directors to file complaints in the context of protecting small depositors.
5. The significance of the amendment is that exemption given to "any amount received from a person who at the time of the receipt of the amount was a director of the company" has been withdrawn. Therefore, effective September 25, 2001, any amount received by a public company from its directors, not being a secured loan, shall be treated as a deposit for the purposes of the Rules. Where a public company accepts any unsecured loan from its director it would be treated as a deposit under Rule 3(2)(ii). Further, the public company concerned should comply with Rules 3 to 10 of the said rule.
