Limits u/s 372a

Dear Members,

U/s 372A of teh Companies Act, the limit of 60% of paid up capital and free reserves and 100% of free reserves is the limit which should be calculated on the latest audited balance sheet OR  the present paid paid up capital and free reserves in the books of accounts.

 

Is there any clarification on the above under the relevant section?

 

Please guide

 

Replies (3)

Dear Members,

 

In continuation of my query, please also guide whether fixed deposit is covered u/s 372a.

 

The situation is such that the Company is reacing loan from the bank and it wishes to create fixed deposit of the same. Then whether it will be covered u/s 372a

Dear mayuri 

1. U/s 372A of teh Companies Act, the limit of 60% of paid up capital and free reserves and 100% of free reserves is the limit which should be calculated on the latest audited balance sheet.

2. section 372A of the companies act relating to inter corporate loans, investements and guarantee but exclud the subsdiaries company.

3. if your company wants to raise the loan then check your borrowing under section 293 (1) (d) of the companies act and its also covered the section 372 a of the companies act, 1956.

regards,

Thanks Mr. Pramod.

My first query is solved but i have doubt in  my second querry relating to the treatment of fixed deposit u/s 372A?

 

 

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