Company giving loan to its shareholder
This query is : Resolved
23 November 2018
Is there any restriction or Prohibition in a private limited company giving loans to its shareholder
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23 November 2018
Yes... Restricted u/s 185 with 186 of CA. Read with both sections.
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24 November 2018
Restrictions are :-
(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 any body corporate more than or equal to 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
(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 any body corporate more than or equal to 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
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