Personal guarantee of directors
This query is : Resolved
13 June 2013
Dear Experts,
My query is whether personal guarantee of directors will come under the meaning "Security" for loans borrowed by the Company. Since in revised Schedule VI, the amount of borrowings have to be classified into secured and unsecured.....
In the Guidance note on the revised Schedule issued by ICAI, there is a clause saying that any personal security of promoters, shareholders or third party (such as shares or other assets) cannot become a security for the purpose of classifying loans under secured loans. However it does not talk about personal guarantee, hence my query
My query is whether personal guarantee of directors will come under the meaning "Security" for loans borrowed by the Company. Since in revised Schedule VI, the amount of borrowings have to be classified into secured and unsecured.....
In the Guidance note on the revised Schedule issued by ICAI, there is a clause saying that any personal security of promoters, shareholders or third party (such as shares or other assets) cannot become a security for the purpose of classifying loans under secured loans. However it does not talk about personal guarantee, hence my query
13 June 2013
To treat a loan as secured, the underlying asset should be owned by the company. Loans raised against personal guarantee of directors, doesn't fit in to the above, hence to be classified as 'unsecured'.
13 June 2013
Thank u v much sir
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