22 September 2011
if x company want to finance y company under same management , in what way its share holding pattern of x and y company should be so that it can finance to y company, without attracting 2 (22) (e)
23 September 2011
SECTION 2(22)(e) GETS ATTRACTED FOR DISTRIBUTION OF ACCUMLATED PROFITS BY WAY OF ADVANCE OR LOANS. CHECK THE AVAILABILITY OF ACCUMLATED PROFITS IN THE BALANCE SHEET OF FINANCING COMPANY. SECOND INSTEAD OF GIVING LOAN SUBSCRIBE REEDEMABLE PREFERENCE SHARES IN THE BORROWER COMPANY WHICH CAN BE REEDEMED AT THE CHOICE OF BOTH COMPANIES.
OR THE ALTERNATIVE IS THE LENDER COMPANY CONVERT ITSELF OR LEND IT THROUGH THE PUBLIC COMPANY INSTEAD OF CLOSELY HELD COMPANY.
THERE ARE OTHER OPTIONS ALSO.
REGARDS
SANJAY SAREEN FACULTY OF COMMERCE STUDIES CONTACTUS@FOCS.IN
24 September 2011
Yes I agree with the expert. In addition be sure that the other company is not at all closely held then only the provisions shall not apply
CAclubindia
