Pvt ltd company- lock in period of director's loan after his exit
akash
(Querist) 11 December 2012
This query is : Resolved
A pvt ltd company has 5 directors right now. One director wants to quit. His equity capital would be paid back immediately after his resignation, and the rest of the amount that he has invested will be converted to loan with an agreed rate of interest and a one-sided lock in of 2 years. i.e. company can pay back earlier if it wants, but the exiting director cannot demand it back before 2 yrs.
Qs-
1. do we need to expressly incorporate that the loan is a company liability and not individual liability of the directors in case the business does not work out and the company has to be wound up? I think since its Pvt Ltd, there should be no personal liability but still want to check if some clause needs to be put in.
2. (linked to point 2) If the remaining directors choose to sell their shares to someone else within the 2 years, does the loan have to be paid back necessarily or can that still be carried over to the incoming directors, since its a company liability?
3. in order to give a loan, does the lender need to be either be a shareholder or a relative of the directors? do we need to give a token 1 share to the exiting director in order to keep his remaining money as loan.
Raj Kumar Makkad
(Expert) 11 December 2012
1. You are required to put this clause mandatorily so as to avoid any future complication.
2. If the same is incorporated as the liability of the company then it shall remain as such even if the remaining directors sell their shares to some other directors.
3. There is no such legal necessity.
