Loan to associate company

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CA Shashikant Lonikar (Querist)
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16 February 2015 A Pvt. Ltd. company has given loan @ 0% interest to its associate company prior to 01 April 2013. Both the company are subsidiary of the same holding company as well as the directors are also common.

There are no changes in outstanding loan amount since it is given.

What will be impact on this loan under the provisions of new companies act.

Arjun Menon

Arjun Menon (Expert)
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16 February 2015 Dear Sir,

Since the Provisions of Section 185 of the Companies Act, 2013; went into effect on 27.9.2013, this provision is prospective and not retrospective, hence the loan(s) advanced by the Holding Company wouldn't fall under this category.

However, transactions post the said date have to met with caution.

If the company has made such transactions post the date of notification vis-a-vis 27.9.2013, then I cant proffer a solution on the same, given the nature of work, in other words, you'll have to hire my service.

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