Loan by Private Limited to Firm

[DK AGGARWAL]

Dear Sir

Clarification-Company Law

1-Can a Private Limited company give short term LOAN on Interest to a relative firm having common Directors and Partners or vice versa

2---Further the relative firm is holding few shares of the above private limited company. Will it make any difference as loan given or received to a share holder firm or company?

Please respond

[DR.MARIAPPAN GOVINDARAJAN]

In my view NO

AI Summary

Related-party loan restrictions: short-term loans between a private company and a related firm with common directors are not permissible. A query asked whether a private limited company can give a short-term interest-bearing loan to a related firm with common directors or partners, and whether the firm's shareholding in the company alters that position. The respondent stated: no, such loans are not permissible, and the fact that the firm holds shares in the company does not change that conclusion.