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Loan and debentures
Whether a holding company issue debentures to its subsidiary company and whether the same is covered under sec 185/186 of companies act. Is there any violations of law under companies act or income tax act.
Replies (9)
Section 185/186 speaks about loans. Subsidiary company cannot hold shares in parent company but since debenture is a debt and not share so may be holding company may issue debentures to subsidiary.
Whether debentures termed as loans or not
Debentures are debts and not loan
So a holding company can issue debentures to its subsidiary company without violations of sec 185/186?
Yes still its a contradictory assumption.
Please be sure it will have a large impact.
Wait for someone elses reply
Ok thank you mam
A debenture is one of the most typical forms of long term loans that a company can take. It is normally a loan that should be repaid on a specific date, but somedebentures are irredeemable securities (sometimes referred to as perpetual debentures). The majority ofdebentures come with a fixed interest rate.
So You cannot issue debentures to its parents company.
Sec185/186 cannot reflect this case.
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