Section 295 of cos act 1956

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

29 November 2012 In case Company A ltd (Public company) gives loan to company B ltd (another Public company)having no holding or subsidary relationship. Both companies have a common director X. Is it necessary to take pre approval.

My query is because upon reading section 295(1), I feel section 295 is not applicable for giving loan to a Public co by another public co (having no holding or subsidary relationship),even though they have a common director.

Can you please highlight under which sub clause the above case falls under section 295 (1) ?

Ajay Mishra

Ajay Mishra (Expert)
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30 November 2012 Hi

Your query is not covered under section 295 of the Companies Act, 1956.

Persons covered under section 295
The section has wider scope and any transaction with the following types of persons by a public company or a private company which is a subsidiary of a public company shall be within the purview of section:—
(a) any director of the lending company;
(b) any director of the holding company;
(c) any partner of any such director;
(d) any relative of any such director;
(e) any firm in which any such director is a partner;
(f) any firm in which a relative of such a director is a partner;
(g) any private company of which any such director is a director;
(h) any private company of which any such director is a member;
(i) any body corporate of which not less than 25% of the total voting power may be exercised or controlled at a general meeting by any director or by two or more directors together; and
(j) any body corporate, the Board of directors, managing director or manager whereof is accustomed to act in accordance with the directions or instructions of the Board, or of any director or directors, of the lending company.

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