Loans & advance (assets)
This query is : Resolved
23 November 2012
Dear Sir,
Have there any restrictions on providing loans & advances by a company(other than banking company) to another company?
Have there any restrictions on providing loans & advances by a company(other than banking company) to another company?
23 November 2012
Dear sir ,
Sec.372A regulates the following transactions:
1. Making any loan to any body corporate.
2. Acquiring the securities of any other body corporate.
3. Giving any guarantee or providing any security to:
a. A person who gives a loan to any body corporate; or
b. A body corporate which gives a loan to any other person.
THERE IS A CEILING LIMIT FOR THE LOANS AND ADVANCES .....WHICH ARE AS FOLLOWS :
‘Ceiling limit'. The ceiling limit on making loan, investment, guarantee, or security
is higher of the following:
i. 60% of the aggregate of paid-up share capital and free reserves of the company.
ii. 100% of free reserves of the company.
Paid up capital shall include paid up equity share capital as well as paid up preference share capital.
HOPE THIS WILL SOLVE YOUR QUERY..........
Sec.372A regulates the following transactions:
1. Making any loan to any body corporate.
2. Acquiring the securities of any other body corporate.
3. Giving any guarantee or providing any security to:
a. A person who gives a loan to any body corporate; or
b. A body corporate which gives a loan to any other person.
THERE IS A CEILING LIMIT FOR THE LOANS AND ADVANCES .....WHICH ARE AS FOLLOWS :
‘Ceiling limit'. The ceiling limit on making loan, investment, guarantee, or security
is higher of the following:
i. 60% of the aggregate of paid-up share capital and free reserves of the company.
ii. 100% of free reserves of the company.
Paid up capital shall include paid up equity share capital as well as paid up preference share capital.
HOPE THIS WILL SOLVE YOUR QUERY..........
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27 November 2012
Thank you so much Sir.
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