Company Law - deposits

Raja Rajeswari S (Querist) 13 October 2009 This query is : Resolved
A private limited Co. has got unsecured loans from the its shareholders? S. 3(1)(iii) prohibits a private co. from accepting deposits from public other than its shareholders, directors or their relatives. Does the word relative mean the relative of shareholder too? If not does the above co. violate the s. 3(1)(iii)?

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Manish Singh (Expert) 20 October 2009
unsecured loans fall under the term deposit but in this case the loan has been procured from a private placement which is nowhere barred under the companies act.