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Loan from pvt company to public company

Aroma (article) (37 Points)

21 November 2014

Can a Private Company give loan to a Listed Company where both have common director?

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ANTONY EDGAR (CA in Practice) (89 Points)
Replied 01 December 2014

Section 185 of Companies Act, 2013 restrict a private ltd company from giving loan to any director or such other person in whom the director is interested.

"Any other perosn in whom director is interest" includes any body corporate at a general meeting of which not less than 25% of the voting power may be excercised or controlled by any such director or by two or more such director together

any body corporates, the board of directors or managing directors is accoustomed to act in accordance with the direction or instructions of the board or of any director or directors of the lending company.

hence, In your case the private limited company cannot provide loan to the listed company since both have the common directors.

regards

Antony edgar

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