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corporate guarantee

sanjivani (ichalkaranji) (146 Points)

15 October 2018

as per co act can one company gives corporate guarantee to / for partner company? plz explain me and pls share applicable section also for further reference....

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sanjith kotni (Articled assistant) (663 Points)
Replied 15 October 2018

refer sec 185,and 186 of the companies act 2013.sec 185 restricts any company to give gaurantee to a company in which the director is interested (Company is required to pass special resolution for giving gaurantee to such companies).once you comply sec185 you have to parallelly comply with sec 186 which puts ceiling on the amount that a company can give as corporate gaurantee (100% of security premium and free reserves or 60%of paid up capital ,free reserves and security premium )whichever is higher.Earlier sec 185 is fully prohibited section now it has got amended fully and prohibition is changed to restriction where you can give gaurantee if special resolution is passed.Pls feel free if you have any doubts.

sanjivani (ichalkaranji) (146 Points)
Replied 15 October 2018

is it applicable to private compay

sanjith kotni (Articled assistant) (663 Points)
Replied 15 October 2018

yeah they applicable to all companies

Bhaskar Bhat (CS Professional) (81 Points)
Replied 16 October 2018

Hi,

Section 185 and Section 186 both applicable , you have mentioned partner company it means company having common Director?

if yes 1st check whether Private company or Public Company, if Private comapany then exempted for section 185( need to fulfill 3 conditions ) if not you have to pass Special res at GM for giving corporate guarantee. and also check Section 185 ( Limit 100% and 60% - if exceed then Special Res required)go through section for such limit.