1. No company shall directly or Indirectly, Advance any loan or give any guarantee or provide any security to any of its DIRECTORS or TO ANY OTHER PERSON WHOM DIRECTOR IS INTERESTED.
2.But in following case above shall not apply:-
(a) Loan to MD or WTD :- as a part of scheme approved by SR. or as a conditions of services which is extended to all employees.
(b) a company in ordinary course of business can provide loan. (Interest rate not less than bank rate declared by RBI)
(c) any loan by holding company to its wholly owned subsi.
(d) any guarantee or security provided by a holding company in respect of loan made by any bank or FI to its Subsidiary company.
[*for pt (c) & (d) loan must be utilized for principal business activities].
Punishment for contravention:-
(•) on company, fine which shall not be less than 5 Lakh Rupees but which may be extend to 25 Lakhs Rupees.
(•) on director or the other person to whom any loan is advanced or guarantee is given, imprisonment up to 6month or with fine not less than 5 lakh Rupees but up to 25 lakh rupees or with both.
EXEMPTION TO A PRIVATE COMPANY:-
[By Notification dated 5th June 2015]
Sec- 185 SHALL NOT apply to a private company:-
(•) In whose share capital no other body corporate has invested any money,
(•) If borrowing from bank or FI or any other body corporate is less than twice of it's paid up capital or 50 crore Rupees whichever is lower, and
(•) Not in default in repayment of borrowings.
Company Secretary GAURAV SHARMA+919990694230 Connect on Watts App with Gaurav Email us [email protected] Submit your guest articles for our website click here we will publish it Subscribe our Email updates like other 21,000 Members, Free/Easy/Comfortableway
Company Secretary GAURAV SHARMA+919990694230 Connect on Watts App with Gaurav Email us [email protected] Submit your guest articles for our website click here we will publish it Subscribe our Email updates like other 21,000 Members, Free/Easy/Comfortableway
