Borrowings under New Companies Act, 2013

Provisons affecting the Borrowing of the Company:

Section 180 (1) © of the Companies Act, 2013 has repealed the Section 293(1) (d) of the Companies Act, 1956 relating to borrowings of the Company w.e.f. 12th Day of September, 2013

Section 180 (1) © of the Act, inter alia, requires that a company cannot borrow, in excess of its paid-up capital & free reserve unless it is approved by Shareholders by way of special resolution.

ABC Ltd., had passed an Ordinary Resolution prescribing the Borrowing Limit as up to Rs. 20 Crores, in its Extraordinary General Meeting held on 5th Day of April, 2009

Present Paid up Share Capital and Free Reserve of the Company is:

Present Long Term Borrowings of the Company is Rs. 9,14,82,789/- and Proposed Borrowing is Rs. 3 Crores, totaling to Rs. 12,14,82,789 which is although in excess of Paid up Share Capital and Free Reserve but very well within the limit of Rs. 20 Crores as prescribed in the EGM dated 5th Day of April, 2009 by way of Ordinary Resolution.

Now, the major question is, whether the Company has to once more obtain approval of the Shareholders by way of Special Resolution?

Regards,

Sondip