21 April 2015
In the Act, there is no definition provided for borrowing in ordinary course of business. It differs from section to section.
If you see Section 180(1)(c), here you can say that borrowing of temporary loan can be considered as ordinary course of business.
It does not specify if a company borrow money from another entity/person (not from bank), will it be treated as ordinary course of business or not?
It differs from context to context, because it is not defined in Companies Act.
Querist :
Anonymous
Querist :
Anonymous
(Querist)
21 April 2015
Completely agreed.
But in my view , a company in its day to day running of business frequently requires funds to meet its obligations, and in order to meet those obligations, approach lenders which could be an NBFC, bank or other entity to borrow for a short period say for a year and which might trigger Section 188( Related party transactions).
I believe that such borrowings would also be considered as a transaction in its ordinary course of business .