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Surety

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(Querist)
23 May 2015 Hello...Can relatives of director can give surety for company borrowings????if yes,what is the related section...????thanks
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Pratik Shah

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Pratik Shah (Expert)
26 May 2015 Hi, What do you mean by 'Relatives of Company'? Can you please elaborate this?
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Nagaraja S Hegde

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Nagaraja S Hegde (Querist)
26 May 2015 sorry...that is actually relative of director.
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Nagaraja S Hegde

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Nagaraja S Hegde (Querist)
26 May 2015 sorry...that is actually relative of director.
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ACS Gurminder Dhami

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ACS Gurminder Dhami (Expert)
27 May 2015 Companies Act,2013 prohibits giving of Loan , guarantee or security in connection with loan taken, to Director or their related Parties through Section 185.

Further the Act prohibits acceptance of deposit apart from Director.

As far as Borrowings are concerned it is governed through Section 179(3)(d) and Section 180(1)(c).

Nowhere in the Act, there is a prohibition that Relative of Director Cannot give Guarantee for Loan being taken by the Company.

As better practice you can in the Board meeting while passing the Board resolution for borrowing give reference that relative of Mr. X, Director is going to give Guarantee for the loan being borrowed.
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Nagaraja S Hegde

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Nagaraja S Hegde (Querist)
27 May 2015 OK.thanks a lot.. sir
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