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Loan under Section 295


Kanika Gupta (C.S Trainee)     29 April 2011

Kanika Gupta
C.S Trainee 
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Can a subsidiary give loan to another fellow subsidiary under section 295 of the companies act,1956?

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SANTOSH SHAH (Company Secretary)     29 April 2011

SANTOSH SHAH
Company Secretary 
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Originally posted by : Kanika Gupta

Can a subsidiary give loan to another fellow subsidiary under section 295 of the companies act,1956?

 Hi Kanika

 

In my view the case should fall under provisions of Sec 372 A ( Inter-Corporate Loan) and not Section 295

as the latter section is for loan to directors.

 

372A section is not applicable in case of pvt companies.

 

Other views solicited

 

regards

Santosh Shah

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Vaibhav Shukla (Company Secretary)     29 April 2011

Vaibhav Shukla
Company Secretary 
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Dear Kanika,

First of all u need to specify as to whether the lending company is a private ltd company or a public ltd company for the simple reason that section 295 does not apply to private ltd. company. However, in case the lending company is a public ltd company than also it is to be seen that both the companies (i.e. lending company as well as borrowing company) does not have any common Director otherwise approval of the central government would be required.

Best Regards

ACS Vaibhav Shukla


(Guest)

Here is my idea

 

http://www.howtochooseit.com/loan.htm

 

I found this website very useful at the beginning. The tips from the experts of government helped me a lot.

 

U too try...

 

Thanks to howtochooseit.com team...

 

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Pooja Taori (Practising Company secretary)     19 April 2012

Pooja Taori
Practising Company secretary 
 9 likes  359 points

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Can any one tell me whether loan to relative , firms, companies in which directors are intereseted attracts 295 or 297 ?? 


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