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SANTOSH SHAH (Company Secretary) 29 April 2011
|Originally posted by : Kanika Gupta|
Can a subsidiary give loan to another fellow subsidiary under section 295 of the companies act,1956?
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
Vaibhav Shukla (Company Secretary) 29 April 2011
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.
ACS Vaibhav Shukla