Restriction on the power of board

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In Section 293 (1)(d) of CA 1956 and now Section 180 of CA, 2013, while calculating the borrowing limit, do we consider the loan sanctioned limit or the actual loan disbursed limit (as appearing in Balance Sheet). Also if any loan has been repaid, will the limit revive accordingly ?

 

Would request you to please advice at the earliest

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As per Sec.180(1)(c) money to be borrowed, togetherwith money already borrowed should not exceed specified limit.  Here, we should differentiate between term loan and working capital limits.  If term loan has been disbursed in full, only repayment will be there and further disbursement is not permitted.  Here we can consider actual amount outstanding as borrowing.  On the other hand, in working capital limits, actual amount drawn can fluctuate from time to time within the sanctioned limit.  Hence total limit should be considered as amount of borrowing.

From lender's perspective at the time of sanction he  will consider whether existing amount of  borrowing plus new limits sanctioned are within the permissible  limits or not.  From borrowing company's perspective, it should ensure that at any point of time actual  amount of borrowing do not exceed specified limits.

 

Dear all,

In the case of a private company, if as per Balance sheet for FY ended 31st Mar 2014, borrowings exceed share capital + free reserves, what should be done? Can this be ratified in the AGM by a special resulotion?

Also, this borrowing is not a new one for FY 2013-2014. It is an old loan, not yet repayed, brought forward from FY 2011-12. As such there was no fresh borrowing in FY 2013-14

 

 

 

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