SEC 186 of the Companies Act 2013

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This query is : Resolved

Rakesh Soni (Querist)

16 June 2023 As per Sec 186(2) (a)
No company shall directly or indirectly -
give any loan to any person or other body corporate;
exceeding sixty percent of its paid up share capital, free reserves and etc........................
As per Sec 186(11)(b)(ii)
"Nothing contained in this section except sub sec(1) shall apply
to any investment-
made in shares allotted in pursuant of clause (a) of sub-sec (1) of sec 62 or in shares allotted in pursuance of rights issues made by a body corporate."
Now My Query is -
The investing company intends to give further loan to other body corporate, then in computing the ceiling limits as per Sec 186(2) (a), whether all existing investments, if any, made in right shares as per Sec 186(11)(b)(ii), are to be included in the aggregate of the loans made by the company.

Jatin Bajaj

Jatin Bajaj (Expert)

22 July 2023 The ceiling limit of all the existing and current loans or guarantees. If the ceiling limit is triggered, the special resolution shall be obtained by the shareholders in the General Meeting. However the allotment made under Right issue shall not be included as it is already exempt as per section 186(11)(2)

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