acceptance of deposit

KUNJAR SHAH (Querist) 06 May 2010 This query is : Resolved
its urgent...!!!!!

Shall loan accepted from Director(who are share holders)by public company be included while calculating limit of 10% of paid up share capital and free reserves?

Sir its too urgent.

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Heaven 2011 (Expert) 07 May 2010
Dear Sir generally section 372A of the Companies act 1956 gives the explanation of the term free reserves. It includes those reserves which are as per the latest balance sheet of the company are free for distribution as dividend and include balance to the credit of the securities premium account but shall not include the share application money.Here the loan is the advance of money which shall be returned with or without interest. Hence it shall never be treated as free to distribute as dividend.

KUNJAR SHAH (Querist) 07 May 2010
Ashish my question is related to Sec 58A read with Companies (Acceptance of Deposits) Rules,1975.

Krishnamurthy Ramdas Iyer (Expert) 07 May 2010
yes

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