Loan to directors of holding company

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Jyothis

Article

489 Points Posted on 10 May 2016

Can a P.Ltd Co give loan to its WT/Managing Director.

Bt such WTD/MD is also the Director of its Holding Co.

In Both Company such directors are common & in Both Coies Body Corporate s have Invested..

For instance

Small Ltd 100% subsidiary of Big Ltd,Both have common Directors A & B.

Can Small Ltd give Loan to its Director A & B, will it attract provisions of Sec.185 .

Replies (3)

Manisha Saboo

52 Points Posted on 10 May 2016

Proviso of Section 185 states:

Provided that nothing contained in this sub-section shall apply to—
(a) the giving of any loan to a managing or whole-time director—
(i) as a part of the conditions of service extended by the company to all its employees;

Therefore, if it is as per the terms of the service agreement, then Section 185 is not attracted.

Jatin Bajaj

1920 Points Posted on 11 May 2016

Company can give loan to its Managing Director and whole Time Director by passing resolution.

So provisions of Section 185 is not attracted which prohibits the Loan to Director.

Jyothis

Article

489 Points Posted on 12 May 2016

1. So 185 won't be attracted if Loan is given to Director of Holding Company,if such director is also the Managing/Whole time Director of Lending Company.

2.What are the practical steps involved in giving a Loan to a Director On a special resolution/As per company policy.

Is there any requirement of Roc filing/Entry in Register under Co Act 2013.

3.Can loan be given for personalneeds of Director.

4.Is it necessary to charge interest on loan given to Directors.