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In case of pvt company a person is a relative and a shareholder. Can he lend money to the company without being subject to the ceiling of 100% of paid up capital and free reserves and share premium?. Can he lend money to the company as a relative without any ceiling on the borrowing?

Fund raising

Posted By: Latha 8 year(s) ago

This question has been closed if you want to answer,you have to re-open.


    Divesh Goyal

As per my observation, That person will be treated as Shareholder and if he will give loan to Company then Company can accept upto 100% of paid up capital and reserves. If company wants to accept more then this amount then Company have to follow Complete process of Section 73.

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    CA Shanu Parakh

A person being a relative of director and shareholder of company , he can lend money to the company without being subject to the ceiling of 100% of paid up capital and free reserves and share premium in according to and following the provisions of the clause (a) to (f) of section 73(2). A person only being a relative of the director of the company and not a shareholder, he can lend any amount to the company as it will not be covered under definition of deposits u/s 73 of the Companies Act 2013.

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