Inter corporate loans & investments section 186

This query is : Resolved

R.Nithya (Querist)
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14 August 2015 If a private company wants to give a loan to Public company (if Directors are Common) then what is the procedure?

Sec 185 (Loan to Directors)gives exemption to private companies with some conditions.

As Per Sec 186 Loan can be given within the prescribed limit or by Special resolution (both Public & Private).

will sec 185 will override sec 186?

Pratik Shah

Pratik Shah (Expert)
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15 August 2015 These both the section are required to be read together. In one sense, Section 185 overrides Section 186. Because section 185 is concerned only for Loans to Directors. Whereas Section 186 is in general i.e. loan to any person.

Hence, first you need to check Section 185. If that is applicable in your case, you have to stop here, a company can not give loan in such case.

but if Section 185 is not applicable, you can go ahead with giving loan after compliance of Section 186.

Let me know if you need any further clarification.