It is a common practice by the Companies to get the loans from its directors and their relatives, however, the majority of the companies do not comply with the disclosure and other compliance with respect to the same. This blog covers in detail, the things to be done and not to be done while availing loans and other monies from its directors and their relatives.
Note – This is a dynamic content and will be updated from time to time for the applicable amendments. Any corrections or suggestions or inputs or support are welcome from the reader either by filing the form at the end of this wonderful post or through the mail at hello@fiscalnow.com. (Last Updated on 05th December 2023)
Disclosure Requirement with respect to the Directors Loans to the Companies
What disclosures should be made by the companies w.r.t. Loan and Advances received from the Directors?
Every private company must disclose the facts and information about the money received from its directors, or relatives of its directors. The words “money received” includes the Loans and Advances.
Every company which is not a private company must disclose only the facts and information about the money received from its directors (not from the relatives of its directors). The words “money received” includes the Loans and Advances.
Where to make disclosures for Directors Loan to Company?
The disclosure shall be made in the notes to accounts to the financial statement of the companies.
Legislative Mandate
The disclosures for Directors Loan to Company are primarily governed by Rule 16A of the The Companies (Acceptance of Deposits) Rules, 2014.