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Question sec 184+sec185 do directors need to disclose interest in case of loan ?

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Shubham Jha

91 Points Posted on 31 March 2021

A public company is giving loan to a body corporate in which a director of such public company is having 26% of total voting power.

1) can company give loan to such body corporate ?

2).do such director need to disclose its interest..?

Replies (3)

Quick Summary

This discussion clarifies director disclosure requirements for loans made by a public company to a body corporate where a director holds significant voting power. It confirms that while companies generally cannot loan to directors, exceptions exist for loans to subsidiaries or through usual business activities, provided specific conditions and resolutions are met. Directors must disclose their interests in such transactions.

CA. Sourav Sarkar

Chartered Accountant

16188 Points Posted on 31 March 2021

No company can give loan to its Directors unless it is a whole time usual activities of the company to provide loans or to give loan to its wholly owned subsidiary.

Yes, Directors shall have to disclose such interest

Shubham Jha

91 Points Posted on 31 March 2021

But company is not providing loan to its director but to the body corporate and section 184(2) specifies that a company may advance loan or security or guarantee to body corporate provided it have to pass special resolution in gm and if the loan given shall be utilized by the borrowing company for principal business activities

can you clarify ?