Property of a company

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13 October 2012 property of a company given on rent to director cover under which section?

Ajay Mishra

Ajay Mishra (Expert)
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13 October 2012 Hi

Section 295 of the Companies Act, 1956 prohibits a public company and a private company which is a subsidiary of a Public Company from making a loan to its Directors, etc. without prior approval of the Central Government. This Department has formulated guidelines for the grant of house building loans by such companies to their Managing Director/Whole-time Directors. The existing guidelines envisage grant of house building loan upto a ceiling of Rs. 5.00 lacs on payment of interest @ 10% per annum.

The Government has, therefore, decided to allow the companies to make house building loans to their Managing Director/Whole-time Directors without obtaining prior approval of the Central Government under section 295 of the Companies Act, 1956 on such terms and conditions as are applicable to its officers and employees. The approval of the Central Government will, however, be necessary in the case of companies having no such scheme or where the house building loan proposed to be made is not covered by the terms and conditions as are applicable to its officers and employees. (Press Note, dated 20-8-1993, reproduced hereunder)

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Property of a company

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