Public company accepting loans from individuals and showing them as loans

Brunda (Querist) 13 December 2013 This query is : Resolved
A public company which is listed accepting loans from individuals who are well known to the directors(Close friends). They are shown under loans. Is it correct to do so? or will sec 58A of the companies act1956 applies to it ? Please explain me in depth.

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Devajyoti Barman (Expert) 13 December 2013
what explanation...academic ??

Brunda (Querist) 14 December 2013
This is for practical purpose in case of an entity.

prabhakar singh (Expert) 14 December 2013
Who are you to the company?

Brunda (Querist) 14 December 2013
Articles assistant going for internal audit

prabhakar singh (Expert) 14 December 2013
The remedy is to complain with sebi and exchange and RBI highlighting provisions laid in 58a (5)and(6)of the Companies Act.

prabhakar singh (Expert) 14 December 2013
But as employee you may not go to such an extent but as an auditor you do need to point it out to directors.

Brunda (Querist) 14 December 2013
Sir,
Actually the public company which was listed accepting money from its director's close friends as SHORT TERM LOANS. i thought that the company should not do so, instead it can accept deposits from individuals(i.e from directors close friends). Is my view correct.

prabhakar singh (Expert) 14 December 2013
The Co. or it's directors are not free to flout the law and rules framed under 58a of the Act either in name of 'short term' or in any other name.

Brunda (Querist) 14 December 2013
Thank you sir. My query solved

Rajendra K Goyal (Expert) 14 December 2013
Agree with the expert prabhakar singh ji.

T. Kalaiselvan, Advocate (Expert) 14 December 2013
I think Mr. P Singh has given proper reply, what else to add?

Ms.Nirmala P.Rao (Expert) 18 January 2014
Dear Brunda,

It/The Public Company can accept such loans from individuals who are directors subject to its objects clause as stated in its Memorandum of Association etc. However, the directors can loan their company without incurring the liability of conflict of interest.