Can a subsidiary give loan to another fellow subsidiary under section 295 of the companies act,1956?
4 Replies
SANTOSH SHAH
(Company Secretary)
(754 Points)
Replied 29 April 2011
| Originally posted by : Kanika Gupta | ||
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Can a subsidiary give loan to another fellow subsidiary under section 295 of the companies act,1956? |
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Hi Kanika
In my view the case should fall under provisions of Sec 372 A ( Inter-Corporate Loan) and not Section 295
as the latter section is for loan to directors.
372A section is not applicable in case of pvt companies.
Other views solicited
regards
Santosh Shah
Vaibhav Shukla
(Company Secretary)
(142 Points)
Replied 29 April 2011
Dear Kanika,
First of all u need to specify as to whether the lending company is a private ltd company or a public ltd company for the simple reason that section 295 does not apply to private ltd. company. However, in case the lending company is a public ltd company than also it is to be seen that both the companies (i.e. lending company as well as borrowing company) does not have any common Director otherwise approval of the central government would be required.
Best Regards
ACS Vaibhav Shukla
Pooja Taori
(Practising Company secretary)
(359 Points)
Replied 19 April 2012
Can any one tell me whether loan to relative , firms, companies in which directors are intereseted attracts 295 or 297 ??
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