query on disclosure of term loan in balance sheet of pvt company

[Vandana Jain]

Dear members,

Term loan taken by company which is secured by immovable property of directors of company will be disclosed in balance sheet of company under which head secured loan or unsecured loan. CHG-1 was filed, though it was not required.

since company has not given any of its security, so can we disclose it under the head unsecured loan. 

further if company would not have filed CHG-1 for above loan, will it make any difference?

please share views.

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CS VANDANA JAIN

Company Secretary

201, Western Business Centre

1/6, New Palasia, 

Indore (M.P.) 452001

Mobile: +91-9589998779

[PD Browse]

If company take term loan and it is secured by directors’ personal property (not company property), then in the balance sheet, company should show it as unsecured loan only. 

Because from company side, no asset is given as security, only directors gave. 

In notes, just mention that it’s secured by directors’ property. 

Filing CHG-1 is not needed here, as company asset not involved. If CHG-1 was filed by mistake, it doesn’t affect your disclosure. 

Only if company asset is given as security, then you show as secured loan and file CHG-1

Regards,

Pankaj Devnani 

Consultant - Corporate Laws 

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Pankaj Devnani
Consultant - Corporate Laws

[Vandana Jain]

The ICAI guidance note on Schedule III indicates that borrowing made by company which is secured by asset of promoter/shareholder/third party does not result in classification of such borrowing as secured. 

So, it means such loan should not be classified as secured loan. Is it right interpretation of guidance note? please share views. 

screenshot of guidance note attached herewith.  

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