A Private LTD Company has taken loans, Advances from directors & directors personal Firms. Now as per Section 73 of Co., Act It will come as deposit since the company's Networth is negative. Kindly suggest me as a Auditor how I can handle this situation ?
I think this gets covered under Co Acceptance of Deposits rules. From the meaning of deposits, Loans taken from Directors are excluded from the definition of deposits as covered u/s 73. Hence a PVT LTD co., can take the loans from directors.
You also need to take a declaration from directors that this loan is out of own funds & not out of borrowed funds.
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