LIVE GST Certification Course by CA Arun Chhajer begins 27th April. Register Now!!

Companies act, 2013

21 October 2016

There are 3 companies X, Y and Z -: Directors of Company X - A & B Directors of Company Y - C & D Directors of Company Z - E & F C - Mother of A, D - Brother of A, E - Husband of B, F - Mother-in-Law of B Can Companies Y & Z offer corporate guarantee towards loan taken by Company X?

Reply
Follow
Share

2 Replies

CS Arjun Rajagopal (B.com, ACS) (1056 Points)
Replied 21 October 2016

yes, it can be provided it is under compliance with sec 186 of CA, 2013

Jatin Bajaj (CS) (2928 Points)
Replied 22 October 2016

Yes as per section 186(2)- , The Company Y &Z can give gurantee to the Loan taken by the Company X upto 60% of the paid up share capital , free reserve and securities premium or 100% of the securities premium whichever is higher by passing board resolution in Board Meeting.

But if such gurantee exceeds the specified limit then Company has to pass special resolution in general meeting.

But if Company Y & Z are private Limited Company , then no need to pass Special resolution for exceeding the specified limit. Board resolution is sufficient