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