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Resolution u/s 295

namrata (company secretary ) (422 Points)

23 July 2010

Please provide me Board resolution for providing Loan to Directors

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2 Replies

Harpreet (* * * * * *) (1670 Points)
Replied 23 July 2010

PLEASE ENSURE WHILE SUBMITTING THE APPLICATION IN RESPECT OF LOANS / CORPORATE GUARANTEE OR FURNISHING SECURITY UNDER SECTION 295 & 372 A OF THE COMPANIES ACT, 1956 THAT THE FOLLOWING INFORMATION / DOCUMENTS HAVE BEEN FURNISHED:

1. The application should be addressed to The Secretary, Department Of Company Affairs, of the Jurisdiction in which you are falling.

2. Application should be submitted along with the prescribed fee by demand draft drawn in favour of Pay & Accounts Officer, Department of Company Affairs, of the Jurisdiction in which you are fallingin the manner provided by GSR No.501 (E) dated 6.7.1999: -

For application made By Companies	Amount of fee to be paid in Rs.
With Authorised share capital:
a) Less than Rs.25,00,000 / -	500
b) Rs.25 lacs or more but less than Rs.5 Crores	1000
c) Rs.5 Crores or more.	2000

3. The rate of interest proposed on the loan should not be less than the four percent above the prevailing bank rate being the standard rate made public under sec 49 of the R.B.I Act, 1934.

4. The quantum of loan along with other loans taken, if any, should not exceed 25 times of gross salary drawn in the proceeding six months prior to making of the application.

5. No guarantee commission shall be allowed to be paid to anyone in respect of the proposals.

The application should be accompanied by the following documents:

6. The proposal should be approved at the meeting of the board. A certified copy of resolution passed should be submitted indicating the proposal of the company, terms and conditions, interest of the directors / relatives if any, clearly specifying

the rate of interest chargeable,
the schedule and terms of repayment
the loan is not being made out of borrowed funds of the company
any other major or important condition having bearing on the loan / financial position of the company.

7. Wherever required members’ specific approval be obtained for proposal .The resolution along with explanatory statement should contain all the relevant details as mentioned in point 6 above. A certified copy of the resolution along with explanatory statement so passed should also be enclosed.

8. The proposal should be accompanied with the declaration that the company has not defaulted in making repayments to the investors the amounts as and when they become due to them.

9. Certified copy of the Memorandum & Articles of Association of Applicant Company.

10. Shareholding pattern of the companies (applicant & borrower), common interest and controlling interest should specially state the interest of director along with his/her relative. (For Sec372A applications)

11. List of Directors of the Board of both the companies (applicant & borrower companies wherever applicable) and disclosing inter-se interest, if any.

12. Financial position and net worth of both the companies for three years along with copies of annual reports.

13. Certified copy of draft loan agreement.

14. If the loan is backed by any guarantees, then the name and particulars of the grantors with their consent.

15. Details of the loan given / corporate guarantee given or security provided to any company / person / firm etc so far along with proof of compliance of Sec372A, wherever applicable should also be furnished.

16. Details of the loan given / corporate guarantee given or security provided to any company / person / firm etc so far under Sec.295, details thereof should be provided.

17. Company should give a declaration to the effect that funds proposed to be loaned are not required for its working capital requirements at least for a year.

18. A certified copy of the loan scheme for the employees of the company, if any.

19. Justification for quantum of loan / guarantee or furnishing security by the company.

20. In respect of all proposals, a certificate from the statutory auditors or a company secretary in whole–time practice to the following effect be enclosed stating therein that

the proposal is in conformity within the provisions of Section 372A of the Companies Act, 1956.
the company has not defaulted in
1. the repayment of any Fixed deposits accepted by the company under Section 58 A of the Companies Act, 1956 or part thereof or interest thereon
2. Payment of dividend
3. Redemption / repayment of debenture and timely payment of interest thereon
4. Redemption preference shares and
5. the Company is regular in filing all forms / returns as required to be filed under the Companies Act 1956.