Can any company give loan to firm under this section
Thanks & regards
Viraj Mehta
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Section 185 of Companies Act, 2013
Replies (4)
Yes. if director of co and relative of director are not partner is firm .
For the loan and investment is concerned the primary compliance as provided in section 186 and relevant rule.
The others compliance would be also applicable as based on transactions.
Like to whom investment would be made like whether that party is related to out director etc.
According to Section 185(1), ACompany shall NOTdirectly or indirectly, advance any loan (including any loan represented by book debt) or guarantee or security in respect of any loan to the following along with others referred to in the section.
- Any firm in which any director(of the Company or of its holding company) or relatives a partner.
- The partner or relative of any such Director.
However, the provisions of Section 185 shall NOT apply to a Private Company –
- in whose share capital, no other body corporate has invested any money.
- Its borrowings from banks/financial institutions/ any body corporate is less than twice of its paid-up share capital or Rs. 50 crores, whichever is lower
- No default in repayment of such borrowings subsists at the time of making transactions under Section 185 of the 2013 Act.
Plz check the amendment provision
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