Can one company take loan/advances from the another group company having same directors ?
and if dicrector can take loan from company (pvt ltd) ,what are the implications ?
PRAVIN DALAL (GM Corporate - Accounts) (37 Points)
05 April 2012Can one company take loan/advances from the another group company having same directors ?
and if dicrector can take loan from company (pvt ltd) ,what are the implications ?
Giridhar S Karandikar
(Team Lead)
(7543 Points)
Replied 05 April 2012
Sub-section 8 to section 372A of the Co's act states the circumstances under whihc the provision of section 372A would not apply whihc is as follows:
(8) Nothing contained in this section shall apply,—
(a) to any loan made, any guarantee given or any security provided or any
investment made by—
(i) a banking company, or an insurance company, or a housing finance
company in the ordinary course of its business, or a company
established with the object of financing industrial enterprises, or of
providing infrastructural facilities;
(ii) a company whose principal business is the acquisition of shares,
stock, debentures or other securities;
(iii) a private company, unless it is a subsidiary of a public company;
(b) to investment made in shares allotted in pursuance of clause (a) of subsection
(1) of section 81;
(c) to any loan made by a holding company to its wholly owned subsidiary;
(d) to any guarantee given or any security provided by a holding company in
respect of loan made to its wholly owned subsidiary; or
(e) to acquisition by a holding company, by way of subscripttion, purchases
or otherwise, the securities of its wholly onwed subsidiary.
So in your case if an holding co is making any loan/gurante to it's wholly owned subsidiary then section 372A would not apply. in all other cases it would apply & the provisions of the section will be requried to be adhered to.
Sub-section (2) of section 295 relating to Loans to Directors exempts a private co from teh application of the provions of section 295 unless it is an subsidiary of the public co. the relevant extrtacts of sub-section (2) are given below:
4[(2) Sub-section (1) shall not apply to—
(a) any loan made, guarantee given or security provided—
(i) by a private company unless it is a subsidiary of a public company,
or
(ii) by a banking company;
1[(b) any loan made by a holding company to its subsidiary company;]
2[(c) any guarantee given or security provided by a holding company in
respect of any loan made to its subsidiary company.]
Anurag Kashyap
(In Job)
(63 Points)
Replied 22 November 2012
Hi Giridhar,
Can a company situated in Malaysia grant Loan or Advance to a company in India? Here both the companies belong to the same group of companies. What are the terms and conditions?
CAclubindia
