Loans by the Directors to Company : As per the provisions of companies rules (Acceptance of deposits) any amount given by the directors to the company will not be covered under deposits under this law. If the company receives any loan or advance from a person who at the time of giving the amount is a director of that company then it doesn’t consider as deposits which are covered by the act.

As per the act no director is allowed to give any sum of money to the company as loan, without giving a declaration in a written form that the amount he is giving is not being the loans , borrowings ,deposits he procured from others.

Important points :

(1) Board of directors resolution :

If the amount of loan which the company is receiving is below the limit specified under act then the resolution passed for this purpose should be informed to ROC through Filing the form MGT-14.
The limit for this purpose is ” Paid up share capital + Free reserves”.

When ever the amount of loan being that is accepted by the company is more than the limit specified under the act then communication of special resolution passed for this purpose to ROC should be done by filing form MGT-14.

While checking whether the amount of loan is within the limits or not , “the loan amount already accepted from the directors also should be considered for arriving at the total allowable sum”

(2) It’s not required to pass resolution every time as and when the company accepts the loan from directors.


Initially the company can pass a resolution in the board meeting for an amount which is higher than what it is going to accept at the movement. But this can be done only when the total amount for which the resolution is being passed is within the limits.

If the total amount for which the resolution is being passed is above the limit specified under the act then a special resolution in general meeting should be passed.Later for which the board of directors will pass a resolution accepting the amount in board meeting. This resolution also shall be communicated in the form mgt 14

(3) Form MGT-14 :

As per Section 117(1), certain resolutions and agreements as required by section 117(3) are required to be submitted with ROC through filing form MGT-14. Section 117(3) also refers matter given in section 179(3) are also required to be reported through MGT-14.
Thus form is meant for disclosing the interest of directors in the company.

The resolution should be communicated through form MGT 14 within a period of 30 days commencing from the date of resolution.

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