Question ID : 31635

Private Ltd company can take loan from relative of directors?

Can a Pvt Ltd company avail loans from directors relative? If yes then what is the maximum amount company can raise as a loan?

Yes, a private company can accept loans from a relative of Director provided that relative of director from whom money is received, furnishes to the company at the time of giving the money, a declaration in writing to the effect that the amount is not being given out of funds acquired by him by borrowing or accepting loans or deposits from others and the company shall disclose the details of money so accepted in the Board’s report. Maximum amount a company can take loan from related is paid up share capital, free reserve and share premium account.