To Give
- Loan / Guarantee/security to Director / Director of holding Co / partner or relative of Director OR
- Guarantee/security in connection with loan taken by Pvt Co. in which such director is director or member and the loan is utilised for principal business activities.
Requirement is
Should Pass special resolution (Explanatory statement shall mention full details of loan / guarantee / security, and purpose.
Exemption
- Private Co. in which no body corporate is shareholder, borrowings from Banks / FI /Body corporate is less than 2 times its paid up capital or 50 crore (whichever is less). And there are no defaults in such borrowings.
- NBFC can give in regular course of business without special resolution.
- If given by Holding company to wholly owned subsidiary company for its principal business activities.
Fines for contravention
- Co: Min 5 lacs. Max 25 lacs.
- Every officer in default - imprisonment of up to 6 months or fine Min 5 lacs. Max 25 lacs or both.
- Recipient - imprisonment of up to 6 months or fine Min 5 lacs. Max 25 lacs or both.
Compliance
MGT 14 has to be filed within 30 days of Special resolution
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