23 November 2012
Dear sir , Sec.372A regulates the following transactions: 1. Making any loan to any body corporate. 2. Acquiring the securities of any other body corporate. 3. Giving any guarantee or providing any security to: a. A person who gives a loan to any body corporate; or b. A body corporate which gives a loan to any other person.
THERE IS A CEILING LIMIT FOR THE LOANS AND ADVANCES .....WHICH ARE AS FOLLOWS :
‘Ceiling limit'. The ceiling limit on making loan, investment, guarantee, or security is higher of the following: i. 60% of the aggregate of paid-up share capital and free reserves of the company. ii. 100% of free reserves of the company. Paid up capital shall include paid up equity share capital as well as paid up preference share capital.
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