C Karthik (CS Final Student ) (81 Points)
07 December 2010Hi friends,
I need clarification on Section 372A - Intercorporate Loans and Advances. I need to know what is the maximum limit we can fix apart from 60% of Paid up Share Capital & reserves or 100% of free reserves?
Is it based on net worth of the Company or sky is the limit??
Thanks in advance.
Arvind Sharma
(ACA)
(1432 Points)
Replied 07 December 2010
The limit on Inter corporate loan is as below:-
60% of "Paid-up Share Capital & Free Reserves"
100% of Free Reserves
which ever is higher.....
The figures shall be taken from Balance Sheet.....
C Karthik
(CS Final Student )
(81 Points)
Replied 07 December 2010
| Originally posted by : Arvind | ||
 |
The limit on Inter corporate loan is as below:- 60% of "Paid-up Share Capital & Free Reserves" 100% of Free Reserves which ever is higher..... The figures shall be taken from Balance Sheet..... |
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My question is if in case the company wants to increase the limit which was previously approved by members in GM, how much we can increase and what will be the limit?
Arvind Sharma
(ACA)
(1432 Points)
Replied 07 December 2010
this is overall limit..,
If company is proposing to make further Inter Corporate Loan/Advance, then analysis that limit after considering that proposal, if total is beyond the limit then GM Special Resolution is required..., refer provision in Act further...
C Karthik
(CS Final Student )
(81 Points)
Replied 07 December 2010
What will be the max limit we can fix?? In our Company we have already fixed limit beyond the 60% - 100% limits..
Now we want to increase again.. what to do..
Arvind Sharma
(ACA)
(1432 Points)
Replied 07 December 2010
You mean you already have cross that 60-100 % limit...???
Then you need to have BR there after GM SR..., in favour of that increment in Loan & Adv to be made.....
Syam kamal
(Company Secretary)
(156 Points)
Replied 07 December 2010
| Originally posted by : C Karthik | ||
|
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What will be the max limit we can fix?? In our Company we have already fixed limit beyond the 60% - 100% limits.. Now we want to increase again.. what to do.. |
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You just need to pass a special resolution in the General Meeting of the company. There is no max limit provided in law as it is purely left to the discretion of the management.
If your company is a listed company, please ensure that the above special resolution is obtained only through postal ballot process.
Jayashree S Iyer
(Company Secretary)
(3224 Points)
Replied 07 December 2010
The Companies Act doesn't fix any upper limit.
Experts please correct me if I am wrong.
CAclubindia
