loan to director
rash_menon
(Querist) 08 July 2010
This query is : Resolved
Can a Private Company give loan to its MD?
Can somebody please give me the format for board resolution for giving loan to MD of a private co?
A V Vishal
(Expert) 08 July 2010
Check whether exempting in sub-section (2) of section 295 available to you or not. If not, check whether:—
1. any loan has been made to:—
(a) any director of the lending company;
(b) any director of the holding company;
2. the previous approval of the Central Government has been obtained for making any loan to the director;
3. no loans, etc. were provided in contravention of the provisions of this section and the guidelines made by the Central Government in this regard;
4. approval of the Central Government is obtained after the lending company ceases to be an exempted company in respect of all future loans, guarantees and security given in connection with a loan or any renewals of earlier transactions;
5. provisions of sections 292 and 372A are complied with, if applicable;
6. necessary entries are made in the Register of Loans;
7. the requisite resolutions are recorded in the minutes of Board/Committee meeting, etc.
Loans to Directors and Relatives
Section 295(1) of the Companies Act provides that every public limited company or a private limited company which is a subsidiary of a public limited company, shall obtain prior approval of the Central Government before giving any loan or giving any guarantee in connection with the loans to directors, relatives of the directors or to a private limited company or a firm in which directors of the
company are interested.
