An Indian pvt ltd co who holds 99% shares in its foreign subsidiary with common directors wants to provide loan to its foreign subsidiary which sec is applicable? Sec 185 or 186?
1 Replies
C.A.SUNIL HUKKERI
(CHARTERED ACCOUNTANT)
(58 Points)
Replied 20 March 2014
Section 185 :- Lending company can give loan in ordinary course of business provided if it charges interest rate not less than notified rate by RBI.
Section 186:- Company can give loan provided amount of loan does not exceed the threshold limit prescribed under subsection (2). If it exceeds the limit then prior approval required to be obtained in general meeting.
It seems loan can be given under both sections. please check other views.
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