Corporate guarantee

What is the remedy when corporate guarantee under section 372A is given without the previous approval of Shareholders?

 

Regards,

Pooja

Replies (2)

As per Ss. (9), the company and every officer of the company who is in default shall be punishable with imprisonment up to 2 years or fine up to Rs. 50000. Provide further that all persons who are knowingly parties to any such contravention shall be liable, jointly and severally, to the company for the repayment of loan.

https://www.legalserviceindia.com/article/l299-Section-372A-of-the-Companies-Act.html

Section 372A provides the following

 

 In exceptional Circumstances, Board may give guarantee without being previously authorized by special resolution subject to conditions that the Board resolution is confirmed by special resolution within 12 months or forth coming Annual General Meeting, which ever is earlier. This window can be used only for giving guarantee.

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