1. Legal Permissibility The Companies Act, 2013 permits private limited companies to borrow money, including loans from banks No specific prior approval is needed unless specified in the Articles of Association (AoA) or exceeds borrowing limits The board of directors...
1. Legal Provision – Section 186 of the Companies Act, 2013 Governs loans, guarantees, and investments made by a company to other entities A company may lend to another company up to 60% of its paid-up share capital, free reserves, and securities premium or 100% of...
1. Permitted Under Companies Act A private company can accept unsecured loans or deposits from its directors Allowed under Section 73(2) of the Companies Act, 2013, and Companies (Acceptance of Deposits) Rules, 2014 The director must give a declaration that the funds...
1. Limited to Unpaid Share Capital Shareholders are liable only to the extent of the amount unpaid on the shares they hold If shares are fully paid, their liability is zero, even if the company incurs losses or faces bankruptcy This protection encourages investment...
1. Holding Company–Subsidiary Relationship A private limited company can become a holding company by owning more than 50% of the share capital or controlling the board of another company The owned entity becomes a subsidiary company The relationship must be reported...
1. Restrictions in Articles of Association The AoA governs the transfer of shares and may include conditions such as: Right of first refusal to existing shareholders Board approval before transfer to outsiders Pre-emption rights or lock-in periods 2. Right of First...
1. Legal Possibility of Conversion Yes, an LLP can be converted into a private limited company under the Companies Act, 2013 The process is governed by Section 366 of the Act and Companies (Authorised to Register) Rules, 2014 Requires the LLP to have at least 2...
1. Check Eligibility and Obtain Approvals Ensure the company is an unlisted private limited company Confirm that there are no existing secured loans or charges on company assets All shareholders must become partners in the LLP Pass a board resolution and shareholder...
1. Eligibility for Conversion Only unlisted private companies can be converted into LLPs The company must not have any existing security interest (charge) in its assets at the time of application All shareholders of the company must become partners of the LLP There...
1. Applicability Applicable to all companies incorporated on or after 2nd November 2018 Mandatory for private limited companies, public limited companies, and OPCs having share capital Not required for companies without share capital 2. Filing Requirement The company...