Deprecation rate on computer software as per company act 2013

[Entire discussion is in relation to the companies which are associate companies and not holding-subsidiary companies]

As per Section 185, the company cannot give guarantee or provide any security in connection with a loan to any other body corporate. However, Section 185 allows corporate guarantee if these companies are holding-subsidiary company.

Section 185 provides that “Save as otherwise provided in this Act, no company shall, directly or indirectly, advance any loan, including any loan represented by a book debt, to any of its directors or to any other person in whom the director is interested or give any guarantee or provide any security in connection with any loan taken by him or such other person”. Section 185 provides exemption to holding company for giving loan or guarantee to its subsidiary companies.

Now i draw reference to Section 186, which reads as follow:

Section 186 (2):

No company shall directly or indirectly —
a) give any loan to any person or other body corporate;
b) give any guarantee or provide security in connection with a loan to any other body corporate or person; and
c) acquire by way of subscription, purchase or otherwise, the securities of any other body corporate, exceeding sixty per cent of its paid-up share capital, free reserves and securities premium account or one hundred per cent of its free reserves and securities premium account, whichever is more.

Section 186 (5):

No investment shall be made or loan or guarantee or security given by the company unless the resolution sanctioning it is passed at a meeting of the Board with the consent of all the directors present at the meeting and the prior approval of the public financial institution concerned where any term loan is subsisting, is obtained:

Provided that prior approval of a public financial institution shall not be required where the aggregate of the loans and investments so far made, the amount for which guarantee or security so far provided to or in all other bodies corporate, along with the investments, loans, guarantee or security proposed to be made or given does not exceed the limit as specified in sub-section (2), and there is no default in repayment of loan instalments or payment of interest thereon as per the terms and conditions of such loan to the public financial institution.

Hence, as per my opinion, reading of the Section 185 and 186 together provides as follow:

1. General Permission: Though giving of loans / guarantee is not possible as per Section 185, it is possible upto 60% of the networth of the company giving loan / guarantee.

2. Specific Permission: Giving loan / guarantee in excess of 60% is also possible, if board resolution is passed at a meeting of the Board with the consent of all the directors present at the meeting and the prior approval of the public financial institution is obtained.


Is my interpretation correct? Kindly advise me.

Dear all,

please spare your time and give me some idea about LLP

1) can a LLP have debit balance of partners. OR LLP should maintain minimum contribution as per llp agreement.

2) cam LLP take unsecured loan from partners or from any other person.

thank in advance.

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hello sir
i wana asking regarding to that
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kandly help me to regard this aforsaid statement.