Thank you Sir,

But as per the Supreme Court Ruling in case " Narendra Kumar Maheshwari V/s Union of India (1989) : Hon'ble Court described the Convertible Debentures as Equity under Section 2(12)

Why am stil concerned about this is because I have not come accorss such interpretation for Section 295 that subscribing to Fully Convertible Debentures would not come under its ambit. And thus dont want to take any action which may be a problem.

Thanks and regards

Deepak Maharishi

Perfectly fine...my understanding regarding debenture as a loan is a general one and subject to any case law or clarification. I'll try and figure out something for Debenture Vs. Loan.

Now our main problem is whether debenture is loan or not...if yes then applicability of 295 confirmend. Right???

Right  Chief....moreover in any case Debenture is considered as a loan, then has it the same status for Fully Convertible Debenture also??

Thanks and regards

Deepak Maharishi

Dear Frds.

Debenture is considered as loan is ok.

but one Loan which given by company to Director is asset for company

and

another Loan is Taken by company secured / unsecured / issuing debenture is Liability for company.

both are different.

under sec 295 Loan is given to dierctor and that is asset for company

where as

Issung debentue is liability for Comapny.

so issing debenture transaction is fall under liability for Company not Assets for the company. so how it attract sec 295. ?

can anyone explain me..

I presume the query relates from the angle of debenture subscribing company... such investment will fall under its assets..

Hence, the query would be classified as if a company subscribes to FCD of another company... will it be considered as providing loan or invetsment in quasi-equity.

Rgds,

Ashish

Dear Yogesh,

Please read the discussion with Mr. Ankur  once again or comments placed by Mr. Ashish just above and you will find that here am not taking about debentures issued by a company.

Thanks and regards

Deepak Maharishi

dear Mr Dipak,

Sorry for early message.

issung debenture is fall under secured loan for one company. and this transaction is not with ur direcor. it is with company.

where common directorship is matter of director declaration / disclosure.

regards.

Originally posted by : Deepak Maharishi
	Considering a situation where loan is given by a company to a private company by way of subscribing its debentures (where director is common). Now the situation is as per section 295. My question is for Debentures. Will subscribing to the Debentures be called as "Loan". Again I would like to clarify : With director common, A Ltd. is giving loan to B Pvt. Ltd. by subscribing to its debentures. Does it come under 295?? Thanks and regards Deepak Maharishi

So dear Yogesh according to you Debenture is equal to loan for the purpose of section 295 but section 295 is not attracted here just because of common directors.

You are humbly requested to read the situation mentioned by Deepak above and analyse the applicability of sec. 295 where debentures are exchanged between 2 companies having common directors. According to me if deb is equal to loan u/s 295 then section 295 is applicable due to common directors.

Please guide further...

Ankur sir,

Subscribing Debenture is contract between company. and as per sec 297 :

During the relevant financial year, the company entered
into any contract, whether a formal or informal, written or
oral-

(a) for the sale, purchase or supply of any goods or
materials;

(b) for the sale, purchase or supply of any services;

(c) for underwriting the subscripttion of any shares in,
or debentures of, the company, with any of the
following –

- any director of the company;

-any relative of any director of the company;

- any partnership firm in which any director of the
company is a partner;

- any partnership firm in which any relative of any
director of the company is a partner;

- any partner of the partnership firm in which any
director of the company is a partner;

-any partner of the partnership firm in which any
relative of any director of the company is a partner;

- any private company in which any director of the
company is a member;

- any private company in which any director of the
company is a director.

so if we have to comply both provision 295 and 297 ?

Pls explain me ?

and what is purpose of 297 here.

Regards.

Yogesh.

Dear ankur sir,

Pls help me in understand above transaction.