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Use of cash credit limit to buy land

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anita

trainee

514 Points Posted on 03 February 2023

Can a private limited company use it's cash credit limit sanctioned for business to purchase a land for industrial use?

Replies (3)

Quick Summary

This discussion explores whether a private limited company can utilise its business cash credit (CC) limit to acquire land for industrial purposes. While generally permissible, it's crucial to consider the company's Memorandum of Association (MOA) and Articles of Association (AOA). Section 6 of the Companies Act clarifies that any company provisions conflicting with the Act become void, highlighting the importance of adhering to legal frameworks when using business funds for asset purchases.

CA Rashmi Gandhi

Chartered Accountant

86505 Points Posted on 03 February 2023

Yes, company is allowed to use CC for land purchase

MPR Sanjay Kumar

3145 Points Posted on 03 February 2023

@ honourable Rashmi Gandhi mam ,could you please explain me the section 6 of companies act what actually tells us

ACT TO OVER-RIDE MEMORANDUM, ARTICLES, ETC.(b) any provision contained in the memorandum, articles, agreement or resolution shall, to the extent to which it is repugnant to the provisions of this Act, become or be void, as the case may be.