Can a Private Limited Company give guarantee to an NPO (University) and Trust in which same persons are hold the managerial Position?
3 Replies
CA Saurabh Singh
(Practising Chartered )
(974 Points)
Replied 28 June 2016
Hi Mayank,
The company can give loan to the trust even though there is same managerial person.
Sec 186 does not state that loan/guarantee cannot be given to related pary only the condition is that the loan should be given within the specified limits of the section.
Mayank Jain
(Student)
(67 Points)
Replied 28 June 2016
Dear Saurabh Sir,
Thank u sir for your gentle Reply,
further, according to your reply, so there is no need to comply the section 185? it means we do no need to follow the provision of Section 185 and make the transation independently according to the section 186.
CA Saurabh Singh
(Practising Chartered )
(974 Points)
Replied 28 June 2016
Yes sec 185 would apply but its is exempted if the condition is followed as under ;
"a company which in the ordinary course of its business provides loans or
gives guarantees or securities for the due repayment of any loan and in respect of such
loans an interest is charged at a rate not less than the bank rate declared by the
Reserve Bank of India."
So if the above condoition is complied no problem, else you cannot give the loan.
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