Board Resolution: Borrowing from a Director
Approve a loan from a director at a board meeting, with the amount, interest, tenure and the declaration that keeps it outside the deposit rules.
What it is
Under Section 179(3)(d) of the Companies Act, 2013, the board exercises the power to borrow money by a resolution passed at a meeting. Money received from a director is not treated as a deposit under the Companies (Acceptance of Deposits) Rules, 2014 if the director gives a written declaration, when lending, that the amount is not out of funds borrowed or received from others. This resolution records the loan terms and the receipt of that declaration.
When it is used
- A director lends money to meet working capital needs.
- Promoter funding before bank finance is available.
- Recording the terms of an unsecured loan for the auditor.
What the template covers
- Company name, CIN and registered office
- Meeting date and place
- Director name and DIN
- Loan amount, interest rate and tenure
- Purpose of the loan
- Receipt of the director's declaration and authorisation
Details you will need
The generator asks for the following. Fields marked with an asterisk in the form are required; the rest can be left blank and filled in later in Word.
Company Details
Company Name; CIN; Registered Office
Meeting Details
Board Meeting Date; Place of Meeting
Lender (Director)
Director Name; DIN
Loan Terms
Loan Amount (₹); Interest Rate (% p.a.); Tenure (months); Purpose of Loan
Statutory Disclaimer
Source of funds declaration provided by director?
Authentication
Chairman Name; Chairman DIN
Stamp duty, registration and filing
The resolution must be passed at a board meeting, not by circulation, because borrowing is a power under Section 179(3). Borrowing beyond paid-up capital, free reserves and securities premium needs a special resolution of members under Section 180(1)(c) for public companies. The loan is shown in the financial statements and reported in the annual return of deposits (Form DPT-3). No stamp duty applies to the resolution; the loan agreement may need stamping.
Generate the BR — Borrowing from Director
Fill in the form and download the draft as a Word file. It is a general template, not legal or professional advice; have it reviewed for your facts before you sign or rely on it.
Need this checked against your facts, or the registration or filing that follows (e.g. the related MCA e-form)? Contact SKAG and Associates
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Frequently asked questions
Is money borrowed from a director under this resolution a deposit?
Not if the director gives the declaration that the money is not borrowed from others, and the company discloses the loan in the board's report.
Can the borrowing resolution be passed by circulation?
No. Borrowing powers under Section 179(3) are exercised at a meeting of the board.
Is interest on a director's loan allowed?
Yes, at the rate approved. The company may need to deduct TDS on the interest.
This page gives general information for reference only. Laws, stamp duty rates and filing requirements change and differ between States, so confirm the current position for your case. Related: all document templates · free tax calculators · compliance calendar and guides.