INTERCORPORATE DEPOSIT BY PVT COs

Sec 372A on Intercorporate loans will be applicable on the company providing the loan.

I think the payee company have no legal compliances in respect of the loan...

Wud like to share my understanding on the issue;

ICD by a pvt company from another pVT compay is quite possible without the application of Section 58A or rules made thereunder.

Section 3(1)(iii)(d) though prohibits pvt company from accepting public deposits(ie from any person other than director/relative or member) , the Term deposit isn't defined and as per the definition of DEPOSIT in deposit rules 1975. Rule 2(b)(iv) exempts the amount taken by a one company from another being a DEPOSIT.

hence, a pvt company can take ICD without any monitory limits ( this means a pvt company with paid up cap of 1 lac can take deposit of 5 crores even)or restriction on the maturity period or rate of interest.

Kindly confirm

Also plz enlighten on the agreement to be entered into. Any format plz forward

thanks in anticipation