Dear All
There are two Companies A & B and both are private companeis subsidiary of Public COmpanies. A had given loan to B and since there were no common directors, section 295 was not applicable.
But now one director is about to be appointed in CO. b, who is also a director in Co A, my query is , whetehr now Sec 295 will get attracted?
Regards
U CAN SEE BELOW FILE
Since co A & B are subsidiaries of public co they are public companies by definition. Sec 295 does not have a retrospective effect. Applicability of the act has to be sen at the time the loan was made. Just confirm that the directors of the borrowing company were not accustomed to act as per the directions of the lending company in case they were then section 295 was being applicable even before director of one company was to be appointed as the director of the other.
A Loan given by Subsidiary Company of the Holding Company to another Subsidiary Company of the same holding company would not attract the provisions of Section 295.
Gupta Sachdeva & Co. Chartered Accountants
New Delhi
CA Final
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