Loans & advance (assets)

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V.T.SYAMKUMAR

V.T.SYAMKUMAR (Querist)
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23 November 2012 Dear Sir,
Have there any restrictions on providing loans & advances by a company(other than banking company) to another company?

CA SAYANTAN BASU

CA SAYANTAN BASU (Expert)
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23 November 2012 Dear sir ,
Sec.372A regulates the following transactions:
1. Making any loan to any body corporate.
2. Acquiring the securities of any other body corporate.
3. Giving any guarantee or providing any security to:
a. A person who gives a loan to any body corporate; or
b. A body corporate which gives a loan to any other person.

THERE IS A CEILING LIMIT FOR THE LOANS AND ADVANCES .....WHICH ARE AS FOLLOWS :

‘Ceiling limit'. The ceiling limit on making loan, investment, guarantee, or security
is higher of the following:
i. 60% of the aggregate of paid-up share capital and free reserves of the company.
ii. 100% of free reserves of the company.
Paid up capital shall include paid up equity share capital as well as paid up preference share capital.

HOPE THIS WILL SOLVE YOUR QUERY..........

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V.T.SYAMKUMAR

V.T.SYAMKUMAR (Querist)
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27 November 2012 Thank you so much Sir.

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