Dear Friends,
I am working for a private limited company, we had applied for a working capital loan, since the collateral amount was less, we decided to give one property of a another group company which has got same directors, please suggest is this a right step, is this approved by company law?
Please suggest, its urgent
first see whether the three conditions as provided in the exemption notification are satisfied or not if statisfied then this transaction is valid.
Dear Prasanth,
As per section 185 of the Companies Act, 2013. Security provided by a holding company in respect of loan made by any bank or financial institution to its subsidiary company is exempted from the requirements of section 185.
Creating security on property of group company, there is no restriction in CA, 2013 but if other company is not holding company or limited company to private company, they should not give security to your private company, it is prohibited under section 185(1) of the Companies Act, 2013.
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