Is there any maximum limit for taking a loan u/s 293 (1) (d)

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Querist : Anonymous

Querist : Anonymous (Querist)

17 February 2012 pursuant to the provisions of the section 293(1)(d) and other applicable provisions, if any , of the Companies Act, 1956 including any statutory modifications or reenactments thereof and pursuant of the provisions of the Articles of Association of the company,
consent of the company be and is hereby accorded
to the Board of Directors of the Company(hereinafter referred to as the Board ) to borrow money time to time from Banks, financial institutions or any other lenders-whether Government or private or form time to time from Banks, from other person on such terms and conditions as the Board may consider suitable , up to such a limit ?????? (is there is any maximum limit)

Jiten Gupta

Jiten Gupta (Expert)
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17 February 2012 293. Restrictions on powers of Board

(1) The Board of directors of a public company, or of a private company which is a subsidiary of a public company, shall not, except with the consent of such public company or subsidiary in general meeting,-

(d) borrow moneys after the commencement of this Act, where the moneys to be borrowed, together with the moneys already borrowed by the company (apart from temporary loans obtained from the company's bankers in the ordinary course of business), will exceed the aggregate of the paid-up capital of the company and its free reserves, that is to say, reserves not set apart for any specific purpose;

Temp Loan:The expression "temporary loans" in clause (d) means loans repayable on demand or within six months from the date of the loan such as short term, cash credit arrangements, the discounting of bills and the issue of other short term loans of a seasonal character, but does not include loans raised for the purpose of financing expenditure of a capital nature.]

Ajay Mishra

Ajay Mishra (Expert)
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17 February 2012 Hi

Section 292(1)(e) of the Companies Act, 1956 deal with the power of the Board to make loan .
Section 293(1)(d) deal with the maximum limit the Board can take loan subject to the approval of shareholders in general meeting. Such limit is the aggregate of the paid up capital and its free reserve of the company.

Regards
Ajay Mishra

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