Receipt of Deposits or Unsecured Loans – by a Private Limited Company

Receipt of Deposits or Unsecured Loans – by a Private Limited Company

Receipt of Deposits or Unsecured Loans – by a Private Limited Company

Receipt of Deposits – – by a Private Limited  – Companies Act 2013

 


Due to certain Scams like Satyam, some Chit Funds Ponzy Scheme’s etc in West Bengal and some other places, the Government had imposed almost blanket ban on unsecured loans / deposits from public for the Private Limited Companies


Later, after some representations, they made it a bit liberal. But still it is quite strict in, from whom it can be taken

So, here we discuss who can and who cannot give loans to a Pvt Ltd company. 


Loan from Banks, and NBFC’s ?

Yes, Of Course, they are the Primary Source.


Loan From Directors

Rule 3(1)(viii) Yes, can accept,

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


Loan From Relative of Director

Rule 3(1)(viii) [1]Yes, can accept,

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


From “Employee”

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


From other Companies

Any Company = Yes, Subject to some conditions


From “Shareholders” ?

No.

NOT Allowed

Unless they are Directors or  Relative of Director


Others ?

Any Partnership firm , Any HUF, Any Proprietorship = No, since firm cannot be director or relative of Director


General Public / Anybody ?

No, since they are not director or relative of Director


Definition of Relative ?

Section 2(77) of the Companies Act, 2013 defines the word relative as below. “relative”, with reference to any person, means any one who is related to another, if –

a) they are members of a Hindu Undivided Family;

b) they are husband and wife;

c) on person is related to the other in such manner as may be prescribed.


 

Detailed Rule 4 ? Definition of Relative ?

Rule 4 of the Companies (Specification of definitions details) Rules, 2014 reads as follows List of relatives in terms of clause (77) of section 2.- A person shall be deemed to be the relative of another, if he or she is related to another in the following manner, namely:-

1. Father: Provided that the term “Father” includes step-father.

2. Mother: Provided that the term “Mother” includes step-mother.

3. Son: Provided that the term “Son” includes step-son.

4. Son’s Wife.

5. Daughter.

6. Daughter’s husband.

7. Brother of any Director

8. Sister of Any Director.

 


 

 

The list given as above is very crystal clear. However, following needs to be understood.

Cousins of Directors = Not included

Grand parents of Directors = Not included

Chacha – Chachi of Directors = Not included

Mama – Mami of Directors = Not included

Bua – Phupha of Directors = Not included

Friends ? Not included

Neighbours ? Not included

and so on


 

Reserve Bank of India,

Definition of Relative in Companies Act , 2013 as per RBI

https://rbidocs.rbi.org.in/rdocs/content/pdfs/15MN16072015_AN5.pdf


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