Akhilesh Kumar Jha
LOAN TO DIRECTORS- Under Section 185 of the Companies Act, 2013
APPLICABILITY OF SECTION
Section 185 of the Companies Act, 2013 is applicable on private company as well as public Company.
IN CASE OF LOAN (INCLUDING BOOK DEBTS):-
GUARANTEE AND SECURITY
No company gives any guarantee or provides any security in connection with aforesaid loan.
ALLOWABLE TRANSACTIONS UNDER THIS SECTION
1- Loan given to Managing Director or Whole Time Director as part of the conditions of services etc or pursuant to the scheme approved by the member by Special Resolution
2- A company make loan or give guarantee or provide security in ordinary course of its business for due repayment of loan. In this regard interest is charged at a rate not less than the bank rate declared by RBI
1- IN CASE OF COMPANY
If default has been made by the company relating to provision of sub section (1) of the Act, the company shall be punishable with fine which shall not be less than Five Lacs Rupees but which may be extended to Twenty Five lacs
2- IN CASE OF DIRECTOR
The director or the other person to whom any loan is advanced or guarantee or security is given or provided in connection with any loan taken by him or the other person, shall be punishable with imprisonment which may extend to six months or with fine which shall not be less than five lakh rupees but which may extend to twenty-five lakh rupees, or with both.