Loan to purchase shares

As per Section77,(2)

 No public company, and no private company which is a subsidiary of a public company, shall give, whether directly or indirectly, and whether by means of a loan, guarantee, the provision of security or otherwise, any financial assistance for the purpose of or in connection with a purchase or subscripttion made or to be made by any person of or for any shares in the company or in its holding company:

 

Exception :-

 

As per section 77 (2)(c) the company make  loans, within the limit laid down in sub-section (3) to persons (other than directors or managers) bona fide in the employment of the company with a view to enabling those persons to purchase or subscribe for fully paid shares in the company or its holding company to be held by themselves by way of beneficial ownership.