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query regarding sec 295 (Loans to Directors)

1340 views 4 replies

Amisha

Asst. Company Secretary

205 Points Joined February 2009

Hi friends.. I have the following query.. pls advise

There is one Listed Company "A" Ltd and one closely held Public Company "B" Ltd.
Now A ltd has taken a Loan from bank and B ltd on behalf of A ltd given a Gurantee to Bank for the said loan.
One of the Director in A and B ltd is common. He act as chairman in B ltd and is an independent Director of A ltd.

Also the Holding of Director in Both the company is between 1 - 2 %

Now my Question is whether Sec 295(Loans to Directors) is attracted or not

Thanks in Advance

Amisha

Replies (4)

Ankur Garg

Company Secretary and Compliance Officer

114788 Points Joined January 2009

Hello Amisha,

As per my understanding in your case section 295 loan to director is not applicable. The above situation is governed by section 372A as this is an Inter corporate Guarantee by the nature of transaction itself.

Further in the above mentioned case section 299, 300 and 301 are also applicable as the director is interested in the transaction.

Views of other learned memebers solicited.

Best Regards