Applicability of section 185 & 186 of companies act 2013

As per companies act 2013 section 186, No company can give loans to anyother company less than the interest rate lower than the interest prevailing yeild of one, three, five, or ten years government security closest to the tenor of the loan.

Company should also get prior approval of financial institutions if term loan is subsisting. They should not give loans or advance if they have defaulted in payment of deposit or Interest there on.

The company can give loans or guarantee to it's wholly on subsidiary companies or joint venture company.

According to section 185(1)(b) of section 185, Holding Company cannot give intrest free Loan to its wholly owned subsidiary Company for the repayment of Loan and in respect of such Loan , it shall not be charged at the rate of intrest less than the RBI. And further there is no restriction in providing Loan by Holding Company to its wholly owned subsidiary Company even if there are common Directors

Thank you for clarifiying

Thank you for clarifiying