Section 295/372a

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

06 September 2011 Our company is Public Limited Company (A). It has advanced loan to a Pvt company (B) in which Director of (A) is also director. Whether Central Government approval is required under Section 295? Is section 372A is also applicable? Kindly guide me in this regard

CS Bijoy

CS Bijoy (Expert)
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08 September 2011 Approval is required if the Director/Directors holding more than 2% share in company B.

Section 372A is applicable in case of any guarantee, Loan, Any investment done by one company in another company. It will not applicable if Company B is Subsidiary of Company A.