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Sources from whom loan can be borrowed by Pvt Ltd Company


Sources from whom loan can be borrowed by Pvt Ltd Company

Private Limited Company can accept loan from following persons:

 

Directors

Private Limited Company can accept loan from Director
Note:
  • Position at the time of acceptance of loan will be considered.
  • Director will submit a declaration that amount is not being given out of funds acquired by him by borrowing or accepting loans or deposits from others.
  • Company can accept any amount of loan from the Director.

 

Promoters

Private Limited Company can accept loan from promoters

 

Relatives of Directors

Private Limited Company can accept loan from the relative of the Director
Note:
  • Position at the time of acceptance of loan will be considered.
  • Relative of Director will submit a declaration that amount is not being given out of funds acquired by him by borrowing or accepting loans or deposits from others.
Relatives here can include the following:
  • Members of a HUF
  • Spouse of Director
  • Father, including step father
  • Mother, including step mother
  • Son, including step son
  • Daughter, including step daughter
  • Son’s wife
  • Daughter’s husband
  • Brother, including step brother
  • Sister, including step sister

 

Members

Private Limited Company can accept loan from members/ shareholders, subject to the fulfillment of the following conditions:
·         Issuance of a circular to its members including following:
o   a statement showing the financial position of the company
o   The credit rating of company
o   The total number of depositors
o   The amount due towards deposits

·         Filing a copy of the circular along with such statement with the Registrar within 30 days before the date of issue of the circular;

·         Depositing such sum which shall not be less than 20% of the amount of its deposits maturing during a financial year and the financial year next following, and kept in a scheduled bank in a separate bank account to be called as deposit repayment reserve account;

·         Certifying that the company has not committed any default in the repayment of deposits accepted either before or after the commencement of this Act or payment of interest on such deposits.

Note: above conditions not applicable to fulfill following conditions:
  • Private Limited Company can accept loan from the Members/ Shareholders (doesn’t go beyond 100% of paid-up Share Capital + Free Reserve+ Security Premium Account )
  • Private Limited Company which is a start-up for 5 years from the date of incorporation
  • Private Limited Company which fulfils the following conditions:
    • The Company is not associates or subsidiary of any other company
    • Company has not any default in repayment of the existing borrowings
    • Its borrowing from Banks or the financial institution or anybody corporate is lower of:
      • Twice of its paid-up capital
      • Rs. 50/- crore
Note: Private Limited Company cannot accept from relative of member/shareholders

Banks or any other financial institutions including foreign banks or financial institutions

Private Limited Company can accept loan from the Banks or any other financial institutions including foreign banks or financial institutions

Employees

Private Limited Company can accept loan from Employees of company
  • The amount borrowed should not exceed the Employees’ annual salary

Other body corporate

Private Limited Company can accept loan from other body corporate
Section 186: A Private Limited Company cannot give loan towards any other individual or body corporate which is beyond
  • 60% of its Paid-up Capital + Free Reserves + Security Premium, or
  • 100% of Free Reserve + Security Premium
  •  In case this limit is exceeded, prior approval by means of special resolution in general meeting is needed. Though in case a loan or guarantee is given through a company towards its wholly-owned subsidiary company or a joint venture corporation than special resolution is not necessary.

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