Company as a Guarantor

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

05 July 2011 Dear Professionals

Sec 295 does not allow Public Limited Company to give any guarantee to any person , but my question is that our CS says that there is specific section which states that a Public Limited Company can be a guarantor if the loan is certain % of company's paid up capital.

Please clarify with section.

Thanks

Jayashree S Iyer

Jayashree S Iyer (Expert)
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05 July 2011 Intercorporate guarantees are permitted u/s.372A of the Companies Act, 1956 upto 60% of paid up capital and free reserves or 100% of its free reserves. Loans, guaranttes, securities beyond this limit is subject to passing of special resolution in the general meeting.

Querist : Anonymous

Querist : Anonymous (Querist)

05 July 2011 Hello Ms. Jayashree

Thanks for your earlier reply. Still I am confused and hence following question to clarify myself.

Can a Public Limited Company give a guarantee to loans availed by its employees from a Cooperative Bank, if yes what are the conditions to be satisfied.

Guest

Guest (Expert)

07 July 2011 Yes It can as one of the benefit of employment. Only Board resolution requires to be passed.

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