Aggregate amount of all the loans, investments, securities and guarantees provided by ABN Private Limited stand at `75.00 lacs as on 31st March 2010 against the paid up capital of `50.00 lacs and free reserves of `60.00 lacs. For making any investments or providing any loan, security or guarantee, members’ approval was not obtained. On 15th April 2010, ABN Private Limited was converted into a public company. Is it necessary for such a company to obtain approval of members after conversion into public company as the aggregate amount of all the loans, investments, securities and guarantees exceed 60% of the company’s paid-up capital and free reserves?
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Query relating to corporate law
Replies (1)
Conditions relating to loans & advances are to be fulfilled at the time of giving loan only. Hence there was no need to get members approval on the date of conversion into public company. However, you will have to take particular care to see that no fresh amount is debited to the loan account which may be treated as fresh loan. Hence to avoid such eventuality and also to avoid any other loan that may be given inadvertently, it will be safer to pass a resolution u/s 372A in current date.
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