Regading co. act

This query is : Resolved

CA Shyam Agarwal (Querist)
Follow

02 January 2016 Hello
A Company has spare funds and want to utilize by way giving loan to other. But as per company act company can`t give loan to the director and other firm/company in which director are partner or director. Then plz advice me that how a company give to loan to other.

Pratik Shah

Pratik Shah (Expert)
Follow

02 January 2016 It is true that Company can not give loan to Directors and related party as per section 185.
However as per notification dated 05th June, 2015, Section 185 is not application to Private Limited Company in following situations
(a) in whose capital no other body corporate has invested money;
(b) if the bonowings of suoh a company from banks or financial institlrtions or any body corporate is less than twice of its paidup share capital or fifty crore rulees whichever is lower; and
(c) such a company has no default in repayment of such borrowings subsisting at the time of making transactions under this section.

Please refer this notification.

CA Shyam Agarwal

CA Shyam Agarwal (Querist)
Follow

02 January 2016 As per the point no. (a) body corporate include any company let it be private or not.

Pratik Shah

Pratik Shah (Expert)
Follow

02 January 2016 Yes...body corporate include any company.
If your company is satisfying all above conditions, then 185 won't be applicable to your company.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now