Dear Experts,
A private limited company (Subsidiary) wants to lend money to a partnership firm (group entity) where the Directors of the private limited company or their relatives are not partners in the partnership firm. However, one of the partners of the partnership firm is the Holding Company and Directors of the Holding Company and Subsidiary Company (lending company) are the same.
Can we go with the strict interpretation of the Section 185 and extend loan to the partnership firm considering that the directors of the lending company or their relatives are not partners in the partnership firm, even though the directors of the lending company and of one of the partners which is the holding company are the same?
If the interest here is falling under indirect category, can we take shelter under Section 184 and interested directors can disclose their interest and then enter into this arrangement with the partnership firm?
Thank you.
CAclubindia
