17 September 2011
A co; is engaged in the business of running cabs on hire. It wants to guarantee the loan taken by directors. can the foll.clause be included in other obj clause of MOA to allow the co; to give corporate guarantee?
To lend and advance money or give credit to such persons or companies and on such terms as may seem expedient, and to guarantee the performance of any contract or obligation and the payment of money of or by any such persons or companies, and generally to give guarantees and indemnities.”
Please take note that if your Company is a public limited company then when you wants to give guarantee for the loans taken by the directors of the company provisions of section 295 of the Companies Act 1956 will attracts at the very outset and requires Central Government approval.and also provisions of section 372A have to be fulfilled. Secondly,as far as object clause is concerned then no doubt it must be in MOA because it is only the MOA which gives power to do any act and the company can not do any thing beyond its MOA.if the company do any thing the act is ultra vires and the guarantee given will be void ab intio.
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