Loan from Directors

[THYAGARAJAN KALYANASUNDARAM]

Dear Experts,

One of client's registered as OPC Pvt. Ltd. company under the Companies Act,2013. He got an order for supply of goods from his client's which is worth around ₹ 50 Lakhs. Whereas for the procurement of these goods he needs some funds to execute the order. For this transaction his friend who is in abroad is willing to provide the funds as loan to him and this has to be invested to the company as loan from directors. Once he received the payment from the customers he has to return it to the respective friend.

Now my query is that, as per the companies act, whether the loan can be taken by the company from the directors which is also a borrowed money. If yes, what is the procedure to be adopted by the directors. If not what kind of steps to be taken to route this amount.

AI Summary

Can a Director's Loan from Abroad Legally Fund an OPC Pvt. Ltd. Under Companies Act, 2013? A client operating an OPC Pvt. Ltd. company under the Companies Act, 2013, needs funds to fulfill a 50 lakh order. A friend abroad offers a loan, intended to be routed as a director's loan to the company. The query seeks clarification on the legality and procedure for such a transaction under the Companies Act. One response indicates that directors cannot lend borrowed money to the company. The client expresses concern about funding limitations for new companies. An alternative suggestion is provided, hinting at other funding methods without detailing them.