12 February 2017
Please let me know the latest position applicable for the FY2016-17 and onward regarding the restriction on loans given by a pvt limited company to its sister concern (which is a Pvt.ltd company or partnership firm or prop.ship firm.).?
13 February 2017
A partial exemption has now been granted to private companies giving a loan, providing a guarantee or offering a security in connection with a loan taken by a sister concern. There are 3 cumulative conditions for availing the exemption:
(a) There is no body corporate shareholder in the lending/guaranteeing company; (b) The lending company’s aggregate borrowings from other bodies corporate or banks or financial institutions is limited to lower of (i) 2X net worth of company; or (ii) Rs 50 crores (c) There is no pending default in repayment of such borrowings by the lending company
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