Company A has a limit of Rs.100 crores under section 372A as per last audited accounts. It has invested and has given loans to bodies corporates to the tune of Rs. 80. Also it has given corporate guarantee of Rs. 50 by getting approval of Board for which ratification is pending in AGM/EGM.
In the meantime, It requires to give loan of Rs.10 to other bodies corporate with in the balance of limits avalaibale under section 372A ie Rs. 20 (Rs.100 total limit as per audited accounts less Rs. 80 already invested).
Can we do this? kindly arrange the view with case laws if any.
03 November 2011
Sec 372A requires prior approval of General Meeting by Special resolution.
However if you does not pass resolution in GM then by BoD resolution you can do this PROVIDED that : -
i) Special resolution should be passed within 12 months, and ii) THERE WAS EXCEPTIONAL CIRCUMSTANCE that you could not waited for holding GM.
In term of your case, you have already violated total limit of Rs 100/- by giving guarantee of Rs 50/-. now again if you wish to give loan of rs 10/-, you can do so by BoD resolution by showing exceptional circumstance and ratify the same in very next GM (within 12 months)
CAclubindia
