can a subsidiary company give loan to a holding company ? if 185 is not attracted but directors are common, holding co. is public company..... will accustomed to act point attract 185 in case of 2 out of 5 directors are common?
Kindly Advice
1 Replies
Jatin Bajaj
(CS)
(2930 Points)
Replied 12 April 2018
As per the bare act of the language save as expreslly provided, no company shall give loan to directors or any other person in whom the directors are interested. So as per the provisions of this section subsidiary Company can give loan to its holding Company but as per Section 185 of the Companies Act 2013, read with Rule 10 of Companies (,Meeting of its Board and its Power) Rules 2014, a Holding Company can give loan to its subsidiaries Companies. Provided subsidiaries Company can utilize the loan for the principal business activities. But as per the provisions of Section 186 of the Companies Act 2013, a Company can give loan to any body Corporate. But as there is contradiction between 2 sections, section 185 of the Companies of the Companies Act 2013, ue the word save as expressely provided, so provisions of Section 185 shall apply. So Company cannot give Loan to its subsidiary Company.
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