can holding company provide loan to subsidiary or vis a vis

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Rakesh srivastav (Querist)
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09 June 2017 Dear all, can holding company give loan to subsidiary company or vis-a-vis?? pls advice ASAP thanks in advance Rakesh

CS Mitesh Mehta

CS Mitesh Mehta (Expert)
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12 June 2017 Loan given by a holding Company to its Wholly Owned Subsidiary is exempted from Section 185 of the Companies Act, 2013, provided the money is utilised by the subsidiary for its principle business activity

Loan given by Subsidiary company to Holding Company is exempted from Section 185 provided the directors of subsidiary company do not hold any shares in holding company or is not directors of holding company

A Private Company which satisfies the following conditions w.e.f. 5th June 2015 would not invite
restrictions contained in section 185:
(a) In its capital no other body corporate has invested any money, i.e., its shareholder does
not include any body corporate;
(b) If the borrowings of the lending company from banks or financial institutions or anybody
corporate is less than twice its paid up capital or Rs. 50 crores, whichever is lower; and
(c) Such a company is not in default in repayment of such borrowings subsisting at the time
of making transactions under this section
In such a case the private company can give loan to anyone without any restriction of section 185

Rakesh srivastav

Rakesh srivastav (Querist)
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13 June 2017 thanks Mitesh

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