Section 295 of companies act, 1956

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Ashutosh Bhatt (Querist)
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18 September 2012 If wholly owned subsidiary company gives loan to its Holding company, then will this transaction attract the provisions of section 295 of Companies Act, 1956 or not.? and also give the violations of this section

Both companies are Public Limited Companies

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CA Dhiraj Ramchandani

CA Dhiraj Ramchandani (Expert)
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18 September 2012 As far as my knowledge is concerned, exemption is given only when HOLDING gives loan to subsidiary.. if subsidiary company is giving loan to holding, it does attract section 295.. still let other experts answer..

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Ashutosh Bhatt

Ashutosh Bhatt (Querist)
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18 September 2012 Thank you sir for your kind view.

I want to ask it is also applicable in the case of the "Wholly Owned Subsidiary Company" ?

and also Other view, if any

CA Ayush Agarwal

CA Ayush Agarwal (Expert)
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18 September 2012 According Sub-section (2), following transactions are exempted from the restrictions of sub-section (1)
i) Any loan made, guarantee given or security provided – by a private company which is not a subsidiary of a public company,
ii) Any loan made – by a holding company to its subsidiary,
iii) Any guarantee given or security provided – by a holding company in respect of a loan made to its subsidiary.

So Reverse Case is Missing in This Section.

It Means Loan From Subsidiary to Holding is Not Exempted u/s 295.

It Will Attract Penalty.

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CA Dhiraj Ramchandani

CA Dhiraj Ramchandani (Expert)
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18 September 2012 Yes ashutosh, even "wholly" owned subsidiary is not liable for exemption..

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Ashutosh Bhatt

Ashutosh Bhatt (Querist)
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19 September 2012 Thank You Sir....

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