♠ Loans are the major source of funding for most of the Companies a part from their Share Capital. Companies borrow from various sources like banks and various other financial institutions. Whereas, Public Limited Companies borrow from mass public by accepting public deposits. Private Companies are strictly prohibited from accepting any loan or deposits from the public.
♠ The Companies Act 2013 which came into force w.e.f 1st April 2014, has restricted the acceptance of deposits by a Private Limited. The Provisions with respect to the same are contained in Section 73 of the Companies Act 2013 and Companies ( Acceptance of Deposits) Rules 2014.The Companies Act 2013 has undergone changes in the past 2 years now the latest position of the provision is as follows:
♠ Now, let us clarify as to who shall be classified as the relative of the Director. The provisions pertaining to the relatives has been defined in Section 2 (77) of the Companies Act 2013 which states that:
(i) they are members of a Hindu Undivided Family;
(ii) they are husband and wife; or
(iii) one person is related to the other in such manner as may be prescribed;
The point (iii) of the above definition includes:
(Author Mayank Phutela is a Licentiate ICSI)