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    Section 185 & 186 of Companies Act 2013

    Posted By : CS Shiriti / Published on : 16-Jun-2022 07:33 AM / View : 604 / Comment : 1

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    If any group Company (private limited company) wants to give or provide corporate guarantee and equitable mortgage of its property in favour of its holding public limited company, is it possible to give the same.

    What if both the companies are private limited companies and what are the compliances need to be done ?
    Read more on : companies section

    • Dear Ma'am,


      Yes it is possible for a private limited company to give loan or guarantee to a loan in favour of its subsidiary public limited company,


      following compliances are to be made for such transaction:

      if amount of such loan or guarantee exceeding sixty per cent. of its paid-up share capitalfree reserves and securities premium account or one hundred per cent. of its free reserves and securities premium account, whichever is more. 


      then Special resolution in general meeting needs to be passed,


      The company shall disclose to the members in the financial statement the full particulars of the loans given, investment made or guarantee given or security provided and the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient of the loan or guarantee or security.


      No loan shall be given under this section at a rate of interest lower than the prevailing yield of one year, three year, five year or ten year Government Security closest to the tenor of the loan.

      No company which is in default in the repayment of any deposits accepted before or after the commencement of this Act or in payment of interest thereon, shall give any loan or give any guarantee or provide any security or make an acquisition till such default is subsisting.

      Every company giving loan or giving a guarantee or providing security or making an acquisition under this section shall keep a register which shall contain such particulars and shall be maintained in such manner as may be prescribed.


      provisions remain same in case of private limited companies also,


      thank you 

      20-06-2022 / 05:38:06 AM
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