Section 295 Query

Hi frends,

I am facing a problem regarding section 295 of the Cos Act, 1956 and expect that i will get the solution for the same at caclub platform. I am working with a closely held ltd. Co. and my MD used to take a lot of personal loans. Now as he had taken loans beyond his limits so the banks who are going to give him fresh personal loans ask for resolution from my company stating that co. is  a co-applicant/co-borrower in the said loan. But i refused to give the resolution on co's letter head on the ground that it will the giving of Co's guarantee for the director's loan which will be a violation of section 295 of the cos act. Now this problem is coming in routine and my MD is not ready to understand the issue even when i told him that there is a prosecution for violation of this section. what should i do. kindly suggest me.

thanks,

CS Poonam

Replies (1)

The MD is taking a personal loan so why does the bank want to involve the company in it?

Even if your MD takes a loan it wont be for company use but for his personal use which is two different things, its a correct thing done by you to not give on companys letter head

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