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Company Law

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Nidhi Prajapati

Accountant

109 Points Posted on 10 September 2020

Dear Experts

If Pvt.Ltd.Company gives guarantee to its directors and according to company law it is offence,so what is solution for this offence,can company drawback its guarantee.

Replies (2)

Quick Summary

This discussion clarifies that a private limited company giving a guarantee to its directors is not necessarily an offence under company law. However, specific conditions must be met, including no investment from bodies corporate and adherence to borrowing limits relative to paid-up share capital or ₹50 crore. The company can also withdraw its guarantee if needed.

pritesh

delhi

720 Points Posted on 13 September 2020

Yess company withdraw back its guarantee

Tejas Bhayani

Student

84 Points Posted on 13 September 2020

There is no offense for private limited company to give guarantee to the director.
Provided such company has fulfilled all the following conditions
1. no body corporate has invested in such company.
2. borrowing from bank and financial institutions is less than twice of paid-up share capital or ₹50 crore, whichever is lower.
3. such company has not defaulted in repayment of above borrowing.
4. company is filling AOC 4 and MGT 7 regularly, if applicable.