S.No.

Entity or Person

Loan Acceptance

1

Director

It is allowed

Provided a declaration is given by the director that the sum has not been given out of funds acquired through him by borrowing or accepting loans or deposits from others

2

Relative of Director

It is not allowed

As Ministry of Corporate Affairs through its notification dated 15.09.2015 has furnished that a private company could  accept unsecured loans apart from director also from a relative of Director providing the relative of director from whom money is received, provides to the corporation at the time of giving the money, a declaration in writing towards the effect that the sum is not being given out of funds acquired through him by borrowing or accepting loans or deposits from others as well as the corporation shall disclose the details of money so accepted in the Board’s report. 

The relative may not be a shareholder of the corporation.

3

Shareholders

Where money accepted from members go beyond 100% of the Paid-up share capital and free reserves.

Where sum accepted from members doesn’t go beyond 100% of the Paid-up share capital and free reserves.

It is not allowed

It is allowed subject to:  Passing a member’s resolution by making provision for security, relating to any for due repayment of the sum of deposit accepted and interest thereon (not below 12.5% at present) which includes the creation of charge (Form CHG1) on the property or assets of the Corporation. 

Filing the details of the money accepted with the registrar.

4

Relative of Shareholders

It is not allowed.

5

An individual who is Director and Shareholder Both

It is allowed.

provided a declaration is given by the director that the sum has not been given out of funds acquired through him by borrowing or accepting loans or deposits from others.

6

Employee

It is allowed

The sum borrowed should not exceed the employees’ annual salary in the nature of interest-free security deposit.