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TOPIC : Loan by HUF as per new Companies Act
Posted on 10 July 2014 at 09:19:00

If the Karta (in individual name) and his wife are both directors in a Pvt Ltd company. And there are no other directors, Can the HUF give a loan to the Pvt Ltd company as per new companies act. If yes, what are compliance's to be done.

Mr. Vikas Golchha

Golchha Pigments Private Limited

Senior Executive, Golchha Pigments Private Limited
Rourkela, India

Free Member, Joined :05/13/2008
No of Topics Posted : 1
Reply/Comments : 0

Re: Loan by HUF as per new Companies Act
Posted on 11 July 2014 at 11:52:00 [Message #3037 ]

Acceptance of deposit by a Private Ltd company from HUF
“Depositor” includes any person who has given a loan to a company. The word “Person” is not defined in the Companies Act. As per Section 3 (42) of General Clauses Act, 1897, "Person" shall include any company or association or body of individuals, whether incorporated or not. Hence, a Pvt ltd Company can accept a loan from HUF.

Rule 2 (c) (viii) The Companies (Acceptance of Deposits) Rules, 2014 – “deposit” includes any receipt of money by way of deposit or loan or in any other form, by a company, but does not include –
Any amount received from a person, who, at the time of the receipt of the amount was a director of the company.:
Provided that the director from whom money is received, furnishes to the company at the time of giving of 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.

In this case, if the husband and wife are the only members of the HUF, then they can give a loan to the company without having to follow the requirements under the The Companies (Acceptance of Deposits) Rules, 2014.

However, if there are more members in the family, they will have to follow the rules contained in the Companies (Acceptance of Deposits) Rules, 2014.

These rules will also not be applicable if the company is
i) a banking company
ii) a non-banking financial company
iii) a housing finance company

The applicable rules are:
Rule 10. Form of application for deposits.-
(1) No company shall accept any deposit, whether secured or unsecured, unless an application, in such form as specified by the company, is submitted by the intending depositor for the acceptance of such deposit.
(2) The form of application referred to in sub-rule (1) shall contain a declaration by the intending depositor to the effect that the deposit is not being made out of any money borrowed by him from any other person.

Ms. Aparajita

(Tradeindia Expert)

Vakil Search

Vakil Search
Chennai, India

Re: Loan by HUF as per new Companies Act
Posted on 11 July 2014 at 11:54:00 [Message #3038 ]

Two more compliances to be followed are :

Rule 12 Furnishing of deposit receipts to depositors.-
(1) Every company shall furnish to the depositor a receipt for the amount received by the company, within a period of twenty one days from the date of receipt
(2) The receipt referred to in sub-rule (1) shall be signed by an officer of the company duly authorised by the Board of directors and shall state the date of deposit, the name and address of the depositor, the amount received by the company as deposit, the rate of interest payable thereon and the date on which the deposit is repayable.

Rule 14. Registers of deposits. (1) Every company accepting deposits shall maintain at its registered office one or more separate registers for deposits accepted or renewed, in which there shall be entered separately in the case of each depositor the following particulars, namely:-
(a) name, address and PAN of the depositor/s;
(b) particulars of guardian, in case of a minor;
(c) particulars of the nominee;
(d) deposit receipt number;
(e) date and the amount of each deposit;
(f) duration of the deposit and the date on which each deposit is repayable;
(g) rate of interest or such deposits to be payable to the depositor; (h) due date for payment of interest; etc.

For any more quries please do reach me on aparajita@vakilsearch.com or call me on 9043004077

Ms. Aparajita

(Tradeindia Expert)

Vakil Search

Vakil Search
Chennai, India

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