I have query regarding Section 372A & 295
1. If Public Limited company wishes to provide corporate gurantee for the personal loans of directors then will it fall under secton 295?and prior approval of Central Government is necessary in this case?
2. for deciding the limit of Board Resolution or Special Resolution whether latest annual balance sheet is to be considered?
Since the guarantee provided is corporate guarantee, & its given to a company though in regard to directors' loans, section 372A is attracted.
Yes, the latest balance sheet must be considered.
Company wishes to provide corporate guarantee to the personal loans of directors and not to any company. In this case whether section 295 is also applicable? and Central Governements permission is also required?
In case of personal loans to directors, its not regarded as inter corporate loans & hence section 372A will not apply & permission of CG will not be required.
Pooja is right. Giving corporate guarantee in connection with a loan made by any other person to any director of the company would fall under Section 295 of the Companies Act, 1956. Central Government approval would be required.
Does not it attracts section 293(1) (a) on security providing company??
Regards- Sudhir
Mr. Sudhir can you please elaborate your query?
Regards,
Pooja
Dear Mr. Sudhir,
How do you feel that it attracts 293(1)(a) which mandates consent of the shareholders for selling, leasing or otherwise disposing of the whole or substantially the whole of the undertaking of the company? Security providing will not fall under this category.
This case falls under Section 295(1)(a).
Others views are solicited.
Regards,
Jayashree
CAclubindia
