Loan to related

[Arun Aggarwal]

Sir

Can a pvt Ltd company can give loan to a partnership firm in which one the director holding 50% shares is also a partner , The company hasn't taken any loan and it will be from the equity?

[DR.MARIAPPAN GOVINDARAJAN]

In my view it cannot be granted. However I also expect the views of the experts.

AI Summary

Loan to related party denied where company director is a partner in recipient partnership, despite equity funding. Whether a private limited company may advance a loan to a partnership firm in which a director who holds half of the company's shares is a partner; the company proposed to fund the advance from equity and has no external borrowings. The responding practitioner advised that such a loan cannot be granted and invited further expert views, flagging related party, fiduciary and statutory considerations.