04 November 2013
As per Section 180(1)(c) of the new Companies Act, 2013, every Company should pass special resolution in general meeting if the Borrowings exceed the paid up capital and free reserves. Similar provision is there in Sec. 293(1)(d) of the old Companies Act, 1956 but now extended to all companies and special resolution is required instead of ordinary earlier.
Now the query is, here Borrowings refer to the Sanctioned limit or the Loan outstanding?
For instance, the paid up capital & free reserves sum up to Rs.350 crores.
The Company has already obtained long term loan of 200 crores from a Bank repayable in 5 years of which, the current outstanding is Rs.125 crores (75 crores already repaid).
Now, the Company proposes to avail another long term loan of Rs.200 crores.
Is the approval of Shareholders' required in this case?