interest free loans URGENT!!!!!!!!!

can a company provide interest free loan to another company? Please answer this. I was asked in an interview and I said: "yes, subject to disclosures and Auditor's qualification"

Replies (4)

if both the co.s are of same person

than this is the matter of substantial interest

 

 

 

and in this case

I think a co. can invest in another co. but can't give loan...

Hai Amitk..

please refer Sec 372 A for Inter corporate loans (applicable for Public ltd co.)

it prescribes minimum interest rate to be charged for a loan given to another company.

So a public ltd co cannot give interest free loans.

Upto my understanding;

 

In certain circumstances interest free loan can be providd like a Holding company may give interest free loan to it's wos.

 

A pvt. company (which is not subsi of a pub. comp.) may give interest free loan. 

 

Likewise, other circumstances have been mentioned in Section 372A itself, whereSection doesn't apply.

 

Regards,

Thanks Vivek Sir,

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