borrowing by a listed public company.

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neha (Querist)

20 March 2010 what are the provisions when a listed Public Co. borrows money rather then lend it from --

1.Directors
2.Shareholders
3. Interested body corporate or non corporate entities
4. Non interested body corporate or non Corporate entities.

Ankur Garg

Ankur Garg (Expert)

20 March 2010 Hi,

If your company borrows money from directors and shareholders then it would be equal to acceptance of public deposit and you have to comply with the provisions of Company Act, 1956 sections and deposit rules, 1975.

Borrowing from corporate body is equal to inter-corporate loan/transaction u/s 372A. Kindly refer your limits as per section 372A(1) and decide what exactly is required board resolution or shareholders approval via special resolution.

Kindly check sections 372A.

Regards

Ankur Garg

Ankur Garg (Expert)

20 March 2010 Also check the applicability of postal ballot rules 2001.

But as per my opinion the same is only applicable where co. is providing loan or extending guarantee.

neha

neha (Querist)

20 March 2010 Dear Ankur,

Thanks for you reply
But if the directors are promoters than its not a deposit and provisions are not applicable.

Ankur Garg

Ankur Garg (Expert)

20 March 2010 Yes you are right.

Than in that case do not forget to comply with stipulations of Rule 2(b)(xi) of the deposit rules, 1975.

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