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Loan to company with common directors

Prabhaw Agarwalla (Article Assitant) (66 Points)

18 February 2017

S Ltd is a private company which is subsidiary of H Ltd (which is also private company holding 80% shares of S Ltd). The companies have directors in common. Can HLtd give loan to S Ltd? If no, what are the ways to give such loan

What are relevant provisions of companies act 2013 applicable in this regard?

Please help

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10 Replies

Ravi Kiran Vustela (Knowledge Seeker) (1353 Points)
Replied 19 February 2017

section 186...... since it is not wholly owned subsidiary.. uh need to follow 186..

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Prabhaw Agarwalla (Article Assitant) (66 Points)
Replied 20 February 2017

But loan to company with common directors is covered u/s 185 (it falls within ambit of specified persons)

Please correct me if I am wrong

Ravi Kiran Vustela (Knowledge Seeker) (1353 Points)
Replied 20 February 2017

pvt companies exempted from 185.. if they satisfy 3 condition.. refer 5th June notification

Vandana J Doshi (Practising Company Secretary) (12562 Points)
Replied 20 February 2017

Refer the notification as referred above..if H ltd satisfies the same, sec 185 is N.A. and only sec 186 is to be followed......

If it does not satisfy, than Section 185 is to be followed.

Prabhaw Agarwalla (Article Assitant) (66 Points)
Replied 20 February 2017

Maam what if at time loan is given Sec 185 is not applicable (as per June 2015 notification) but later on it fails to satisfy the condition specified in notification. Do we need to repay back the loan?