lalanjee jha Started The Discussion:
Dear Sir, Can a pvt. ltd. Company take loan from individuals being outsiders . Kindly clarify me as per Company Act and Income Tax Act. Thanks & Regards L.Jha
Yes it can if it is authorised by its Articles of Association and the borrowing is within the limits specified under the Companies Act and the full compliance of the provisions are made.
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Sorry, a pvt co. by its very definition contained in Sec.3(1)(iii)(d) of Companies Act 1956 is prohibited from accepting deposits from persons other than its members, directors and their relatives other than prescribed in Companies (Acceptance of Deposits) Rules 1975. Here deposit includes loans (Ref.Explanation to Sec.58A).
Section 3(i)(iii) of the Companies Act, 1956 prohibits any invitation or acceptance of deposits by a private company from persons other than its members, directors or their relatives. This means that there cannot be any public issue by a private company for acceptance of deposits or debentures, loans etc. but through private contacts it can borrow.
Dr. Harpreet Kaur
Associate Professor (Business Laws)
No. Pvt Ltd companies are not allowed to take loans from outsiders i.e. who are not members of the company, which is again limited to 50 members.
Dr friends, please do not mislead people with wrong adv as given by siddharth,Avika, Sajid. A piece of advise: individuals dealing with company law related issues should speak to preferably a Professional Practising Company Secretrary or at least a chartered Accountant, who will be able to advise and suggest remedies than asking questions to individual who are not professiionals related to specific area. "Some of the opinions posted looks like a "Phd doctor treating a sick person instead of a medical doctor".
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