Intercorporate Loan

Dear Professional Colleague

 

A ltd want to give intercorporate loan to B ltd. A ltd having enough reserve to takecare of Sec 372A.

 

 

A Shareholding

Unlisted public Company

B Shareholding

Listed Company

Board of Directors

Mr.A 5.00

Mr.B 4.00

Mr.C 0.00

Mr.D 0.00

 

Mr.A 7.18%

Mr.B 2.51%

Mr.C 0.00

Mr.D 0.05

Mr.E 0.00

Mr.F 0.00

Common Directors

A,B,C,D

A,B,C,D

Promoter cum Director

A,B,C

A,B,C

 

Apart from the above, one common shareholder (Z ltd OCB ) is holding 49% in B ltd and 46% in A ltd.

 

Mr.A is holding 100% shares of Z ltd and Mr.A is a Director of Z ltd.

 

Please give valuable points in respect to companies act and income tax act angle, which will help us to think before ink.

 

 

Replies (1)

From the Companies Act angle, I believe the ICD can be given by either company. Section 295 will not be hit. Since limits under Sec 372A and 293(1)(d) are in place, no other precaution to be taken. Only details have be filled in Sec 301 register of both the Companies.

 

From Income Tax point of view, deemed dividend has to be verified.

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