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Does Section 186 of Companies Act do not apply to Builder Developer of Residential infrastructure.

Dhruv Jain (Practicioner) (200 Points)

07 April 2023

With respect to loans, guarantee or security, section 186 does not apply to a company engaged in the business of financing of companies or of providing infrastructural facilities.

Does non applicability of section 186 of the companies act apply to the realtors, builders and developers of Residential infrastructure in an urban city.

Will this be termed as social development as per the activity included/ defined in the term infrastructural facilities.

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CA Rakesh Ishi (Working at Private Company) (7775 Points)
Replied 09 April 2023

The term "infrastructural facilities" has not been defined in the Companies Act. But, as per the interpretation of the term, it may include facilities such as roads, bridges, airports, railways, power plants, telecommunication networks, water supply, sewerage, and other such facilities that are essential for the development of any country or region.

Realtors, builders, and developers of residential infrastructure in an urban city may be engaged in providing infrastructural facilities to a certain extent.

However, it is unlikely that they would be considered as a company engaged in the business of providing infrastructural facilities under Section 186 of the Companies Act.