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loan from holding co.

Nitesh (Chartered Accountant) (340 Points)

18 September 2007

If any loan is accepted by susidiary from its holding co. as unsecured loan than will it is covered under section 58A of the companies act for subsidiary co. if reply as soon as possible. kindly given references to your opinion

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3 Replies

Ramasubbu K (Sr.GM - Finance & Company Secreta) (685 Points)
Replied 21 September 2007

Any amount received from a company by any other company will not be treated as deposit as per Companies (Acceptance of Deposits) Rules. So amount received by a subsidiary company from a holding company will not be covered under Section 58A of the Companies Act.

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Srivathsan Rangarajan (Chartered Accountant) (66 Points)
Replied 10 October 2007

Absolutely, "deposits" does not include loans / deposits from the holding company. However, where subsidiary is not a wholly owned subsidiary the lending company has to comply with the requirements of section 372-A " Intercorporate Loans and Investments".

(Guest)

Inter-corporate deposits are exempt despoits within the meaning of Rule 2 of the Companies (Acceptance of Despoits) Rules, 1975. Therefore, section 58A does not apply when a loan is given by holding company to subsidiary company but section 372 A will be applicable unless subsidiary is a whololoy owned subsidiary. For any further query write to me at tayalsir @ rediffmail.com