Company as a Guarantor

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

05 July 2011 Dear Professionals

Sec 295 does not allow Public Limited Company to give any guarantee to any person , but my question is that our CS says that there is specific section which states that a Public Limited Company can be a guarantor if the loan is certain % of company's paid up capital.

Please clarify with section.

Thanks

Jayashree S Iyer

Jayashree S Iyer (Expert)
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05 July 2011 Intercorporate guarantees are permitted u/s.372A of the Companies Act, 1956 upto 60% of paid up capital and free reserves or 100% of its free reserves. Loans, guaranttes, securities beyond this limit is subject to passing of special resolution in the general meeting.

Querist : Anonymous

Querist : Anonymous (Querist)

05 July 2011 Hello Ms. Jayashree

Thanks for your earlier reply. Still I am confused and hence following question to clarify myself.

Can a Public Limited Company give a guarantee to loans availed by its employees from a Cooperative Bank, if yes what are the conditions to be satisfied.

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Guest

Guest (Expert)

07 July 2011 Yes It can as one of the benefit of employment. Only Board resolution requires to be passed.