Corporate guarantee

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RAKESH KUMAR JAJORIYA (Querist)
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26 November 2014 whether a company can give corporate guarantee to bank in light of the recent amendment to companies act for its group concern.
please clarify

CS Mitesh Mehta

CS Mitesh Mehta (Expert)
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26 November 2014 Any guarantee given or security provided by a holding company in respect of loan made by any bank or financial institution to its subsidiary company is exempted from the requirements of section 185 of the companies act 2013

RAKESH KUMAR JAJORIYA

RAKESH KUMAR JAJORIYA (Querist)
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26 November 2014 what if relationship is like associate concern

CS Mitesh Mehta

CS Mitesh Mehta (Expert)
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26 November 2014 Loan given by company to associates company
If Directors of Associates Company are not director or member of lending company or BOD, MD, Manager whereof is not accustomed to act in accordance with the directions of the BOD or directors of the lending company. The section 185 is not attracted.
As per Section 2(6) of The Act, associate company”, in relation to another company, means a company in which that other company has a significant influence, but which is not a subsidiary company of the company having such influence and includes a joint venture company.
Explanation. - For the purposes of this clause, “significant influence” means control of at least 20 percent of total share capital, or of business decisions under an agreement;

RAKESH KUMAR JAJORIYA

RAKESH KUMAR JAJORIYA (Querist)
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01 December 2014 my question is this
M/s abc company limited taken credit facilities from a bank.
whether xyz private limited(associate company of M/s abc company limited) can give corporate guarantee to bank for loan taken by M/s abc company limited.

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