Intercorporate loan

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CA.Ritu Agarwal

CA.Ritu Agarwal (Querist)
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11 July 2014 Hello...

Is there any limit for a company to give loan to any other company.

Shashikant Sharma

Shashikant Sharma (Expert)
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11 July 2014 As per Section 186(2) of the Companies Act, 2013 no company shall give loan to any other company 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.
A Company may give loan exceeding to the above limit by passing a special resolution.

By board resolution – upto 60% of paid-up share capital and free reserves or 100% of free reserves, whichever is more.

By special resolution – if exceeds the above limit.

Ankur Garg

Ankur Garg (Expert)
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12 July 2014 Agree with the opinion of expert.

No there is no monetary limit fixed by CA 2013 except specified percentage as given in section 186. However you are requested to refer section 180 in this behalf.

As per section 180, the Board of Directors of a company shall exercise the following powers only with the consent of the company by a special resolution, namely:—

Power to borrow money, where the money to be borrowed, together with the money already borrowed by the company will exceed aggregate of its paid-up share capital and free reserves, apart from temporary loans obtained from the company's bankers in the ordinary course of business.

Refer section 180(1)(c)

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