Section 81 Urgent

Dear members,

One of the public Co. has taken loan from the IDFC (which is a specified institutions by central government under section 4 A. Correct me if m rong?)

Now this IDFC is goin to give loan to the public Co. . One of the terms and conditions are included that in case of default of the Company the loan wil be converted to equity.

Section 81 says that :

[(3) Nothing in this section shall apply—

(a) to a private company; or

(b) to the increase of the subscribed capital of a public company caused by the exercise of an option attached to debentures issued or loans raised by the company—

(i) to convert such debentures or loans into shares in the company, or

(ii) to subscribe for shares in the company:

⁵[Provided that the terms of issue of such debentures or the terms of such loans include a term providing for such option and such term—

(a) either has been approved by the Central Government before the issue of debentures or the raising of the loans, or is in conformity with the rules, if any made by that Government in this behalf; and

(b) In the case of debentures or loans other than debentures issued to, or loans obtained from, the Government or any institution specified by the Central Government in this behalf, has also been approved by a special resolution passed by the company in general meeting before the issue of the debentures or the raising of the loans.]]

..And the bank is demanding the memvbers resolution .. since this section does applly bkoz we are satisfying both condition mentioned above.

Please correct me if  i m rong..

URGENTTTTTT

REGARDS,

mAYRUI LAL