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Applicability of section 295

Kiranmayi (Company Secretary) (37 Points)

13 March 2012

Hi all,

Corporate Guarantee is given by Public company in connection with a loan made to a Private Company in which lending company's director's relative is a director.

Will Section 295 apply in this case?

Regards,

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5 Replies

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 13 March 2012

Hi,

As per my reading and understand of section 295, it is not applicable to your case bcoz the situation mentioned by you is not cover in clauses of section 295(1).

Clause (b) of section 295(1) is similar to your case but this clause is for a partnership firm, hence not applicable to your case.

In the same way Clause (c) of section 295(1) is also similar to your case but this clause is silent about director's relative as a director of such private company, hence not applicable to your case.

So as per my understanding section 295 is not applicable to your case.

Wait for other opinions.

Regards

1 Like

sriram (CA Final) (203 Points)
Replied 13 March 2012

Sir,

The company despite of change in the new name is using old name in their ESI, PF, Welfare fund returns i.e they have not updated new name with the these govt organizations. Does it attract any liability over the company. pls reply. Pls refer any act on this subject which i can refer through

Regards,

Sriram.V

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 13 March 2012

Hi Sriram,

I understand your query. It would be a bit difficult for me to search the exact section which necessitated the name change update with govt. authorities. However there is no need to search the exact provision as this name change update with govt. authorities is really very important and for sure you won’t find any section which relaxes this requirement.

Later on you may face “show cause notice” kind of procedure from the govt. authorities which may be converted into penal liability as per the rules of governing Act.

So update name change without undue delay.

Regards

Ankur

sriram (CA Final) (203 Points)
Replied 13 March 2012

Thanks for the reply sir. I will do the name updation at the earliest. Regards, Sriram.V

Pradeep Singh (article) (65 Points)
Replied 13 March 2012

as per sec 295 (1) (A) of compaines act, "any director of the lending company or of a company which is its holding company or any partner or relative of any such director;"

therefore sec 295 is applicable on the public co , which give gurrante to the pvt. co in which director is the relative of director of public co.