Can private company accept advance from promoter and what is reporting requirement?

As per Companies Act, 2013, deposit includes any receipt of money by way of deposit or loan or in any other form by a company.

As per above explanation advance will also be considered as “Deposit”, thus as per the companies act,2013 a private Limited Company can accept Loans and Advances from Directors, other companies and from Banking and Financial Institutions as per the limit specified in the Act. As a result of which if Promoter is a director or shareholder in the company then company can accept loan from promoter.

Further as compliance with regards to the advance taken, Private company need to pass special resolution if the amount of loan taken exceeds 100% of Paid up share capital and Free Reserves.

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