"A" company has provided Corporate Bank Guarantee to Bank for Rs.10 Cr on 19th September 2016 to its wholly owned subsidiary'B" . "B" allotted further rights shares to other company "C" effective 5th Sep inadvartantly . Upon such issue , company "C" became holding company of "B" resulting in violation of section 185 from the company "A'. Suggest remedy for the violation.
ACCORDING TO SECTION 185 OF THE COMPANIES ACT 29013 , A HOLDING COMPANY CAN PROVIDE LOAN , GURANTEE OR SECURITY IN CONNECTION WITH LOAN TO ITS WHOLLY OWNED SUBSIDIARY COMPANY . THERE IS NO VIOLATION OF SECTION 185 AND FURTHER A HOLDING COMPANY CAN PROVIDE CORPORATE GURANTEE OR SECURITIES IN CONNECTION WITH LAON ON BEHALF OF SUBSIDIARY COMPANY BUT CANNOT PROVIDE LOAN.
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