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Loan to wholly owned subsidiary company

Jatin Bajaj (CS) (2928 Points)

06 May 2016

Can A Holding Company give Loan to Wholly owned Subsidiary Company at the Concessional Rates.?

N Secondally weather Holding Company can purchase property can give on Lease to wholly owned Subsidiary Company?

Kindly Revert the Relevant Rule or Section under Companies Act 2013?

Please do Revert.

Thanks

With Best Regards

CS Jatin Bajaj

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4 Replies

Kamal Kumar (B.Com) (647 Points)
Replied 06 May 2016

Hi Jatin

In case of Loan by Holding Company to its WOS, the requirement of sub-section (3) of section 186 shall not apply, therefore you need not to have Shareholders approval but you have to comply with interest provisions as mentioned in the Section 186(11).

you can see the relevant provisions by click of mouse at the below link:

https://www.dokmart.com/books/subsections?subsection=33

Jatin Bajaj (CS) (2928 Points)
Replied 06 May 2016

Thanx Kamal for your Answer.

But can Holding Company can purchase property and give it on lease to its wholly owned subsidiary Company ?

CS Sanchita Bhardwaj (Company Secretary) (111 Points)
Replied 06 May 2016

Absolutely. Loan can be given by Holding compnay to WOS subject to complying section 186(7) for interest chargeable. Also, Holding Company can lease property to WOS subject to fulfilment of provisions of section 188 as WOS will be related party.