Applicability of sec 185 & 186 of companies act

A company can issue a corporate guarantee to other company subject to provisions of Section 185.

Further, if two companies do not have a common diretor, section 185 is not operative.

Suppose there are two Companies - A & B. Company "B" is in need of a corporate guarantee and Company "A" is willing to extend a corporate guarantee. In case company "A" issues a corporate guarantee for company "B" and later the director in Company "A" becomes a director in Company "B" too. The director will have to show his interest in various entities in the very next board meeting post his appointment. Also, the guarantee will remain effective for the remaining period and no violation of section 185 would be treated. However, the Company "A" and "Company B" will not be able to give corporate guarantees for each other till the period such director remains a director in both the companies.

Any other views on the matter are welcome on the matter.