Personal guarantee of directors

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This query is : Resolved

Sai Sundar (Querist)

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

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

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'.

Sai Sundar

Sai Sundar (Querist)

13 June 2013 Thank u v much sir

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