South Village Farmers' Producer Company Ltd. wants to give loan to its Directors for ₹5 lakh. The company seeks your advice regarding the loan to Directors. Explain the provisions with reference to the Companies Act. Wha

In accordance to section 581ZK of Companies Act, 1956, any loan or advance to any director or his relative shall be granted only after the approval of members by a resolution in general meeting. In the present case South Village Farmers' Producer Company Ltd. may give loan to its Directors only after the approval of members by a resolution. In case the loan is given to the members, the section provides that the Board may, provisions made in the Articles of the company, provide financial assistance to the members by way of credit facility in connection with the business of the Producer Company, for a period not exceeding six months.