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Amisha (Asst. Company Secretary)     24 March 2011

Loan to subsidiary company

Dear All

A listed public company (A) is holding more than 80 % share in a pvt. co.(B). Now A wants to make loan to B. What wud b the applicable provisions. If in case anybody have a draft resolution pls attach.

Thanks & Regards,



 3 Replies

SANTOSH  SHAH

SANTOSH SHAH (Company Secretary)     24 March 2011

Originally posted by : Amisha

Dear All

A listed public company (A) is holding more than 80 % share in a pvt. co.(B). Now A wants to make loan to B. What wud b the applicable provisions. If in case anybody have a draft resolution pls attach.


Thanks & Regards,

 Hi Amisha

Please refer the provisions of Section 372 A of companies act.

Its case of Inter-Corporate Loan, the loan made is subject to the limits as per section 372A.

It should not exceed 60% of Paid up sharecapital + free reserves or 100% of its free reserves which ever is higher.

 

Other views welcome.

 

regards

Santosh Shah

Jayashree S Iyer

Jayashree S Iyer (Company Secretary)     24 March 2011

I would like to add further that any  loan exceeding the limits specified as  above shall be made subject to previous authorisation by a special resolution passed in a general meeting.

Amisha

Amisha (Asst. Company Secretary)     24 March 2011

Hi

Thanks Santosh & Thanks Jayshree.

Regards,


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