Sir/Ma'am, Y Ltd holds 75% of the share capital of X Ltd. , so X Ltd. is a subsidiary of Y Ltd. but not an Wholly Owned Subsidiary. Now , the holding company Y Ltd has granted loans to X Ltd. Rs 1 crs. Is this loan a violation of section 185(C) of the companies (amendment) act,2015 given that there are no common directors between the two companies? Or is this loan exempted/permissable under section 185 of the Companies Act,2013 as it was under section 295 of the companies act,1956? Thanking you in anticipation Mayank Agarwal
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Applicability & violation of section 185 of the companies act, 2013
Replies (2)
AS per section 185 of companies act 2013, Read with Rule 10 of Meeting of Board And Power rules,
A Company can provide, loan to wholly owned subsidiary ( including Subsidiary also) . provided such loa shall be utilized by subsidiary company for its principal business activities. section 185 is exempted from such a provison. It is not a violation under section 185. And such a loan is permissible under section 185(1) c
Thanks for the prompt response.
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