Can company take loan from other than company / share holder

Querist : Anonymous (Querist) 02 June 2010 This query is : Resolved
One of my clients has taken loan from Company where he hold no shares of the company. As per my view, company can't grant loan to individual in such a manner as per company law. He asked me section of the company law. I am not known section under company Act. Can Anybody help me ???

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Raj Kumar Makkad (Expert) 02 June 2010
Though I cannot tel you particular section at this time but definitely you are right.

Vineet (Expert) 03 June 2010
There is a restriction on grant of loan by a public company to its directors or any entity in which such director is interested u/s 295 of the Companies Act, Loan to companies under same management u/s 370 and Inter Corporate Deposit u/s 372A.

As far as loans to other entities including Individuals is concerned, the Board may authorise or delegate power to a director to grant loans within the specified limit and purpose u/s 292 of the Act. Therefore there is no blanket restriction on grant of loan by companies to a non member.

Vineet (Expert) 03 June 2010
And yes, if your client is body corporate, ICDs are permissible with the restrictions prescribed in section 372A.

soumitra basu (Expert) 03 June 2010
There is no prohibition in company law restricting the loan to an individual provided the terms and interest thereon are not prejudical to the interest of the company.

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