Affluence Advisory
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Introduction Section 186 of the Companies Act, 2013 pertains to compliances to be made by companies with respect to loans made, guarantees given, securities provided and investments made by the companies. Section 186 (11) However, Section 186(11) of the Companies Act, 2013, provides an exemptio
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FAQ :
Section 186(11) of the Companies Act, 2013, offers exemptions to specific companies, such as banking, insurance, and housing finance companies, concerning loans, guarantees, securities, and investments made in their ordinary course of business.
Exemptions apply to banking companies, insurance companies, housing finance companies, companies financing industrial enterprises, or those providing infrastructural facilities, in the ordinary course of their business. This also extends to NBFCs registered with the RBI and finance companies registered with IFSCA.
The amendment clarifies that NBFCs registered with the RBI, whose principal business is acquisition of securities, are exempt from Section 186 approval for loans, guarantees, or securities provided in the ordinary course of their business.
For finance companies registered with IFSCA, the amendment specifies that activities under Regulation 5(1)(ii)(a) or (e) of the IFSCA (Finance Company) Regulations, 2021, carried out in the ordinary course of business, are exempt from Section 186 approval.
The amendment provides regulatory certainty, reduces duplication of compliance, and eliminates the need for Section 186 approval for core financing activities of NBFCs and IFSCA finance companies, streamlining their operations.
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