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Section 185

Divya Jain (Job) (26 Points)

01 March 2014

Dear Members / Experts,

Can a Pvt. Company give loan to an AOP in which its director is partner and to joint ventures. whether it will be covered under section 185 of Companies Act, 2013?

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2 Replies

P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 04 March 2014

a) Loan to the AOP: AOP will be in the nature of a firm in which director is partner and hence prohibited under Explanation (b) to Sec.185(1).

b) Loan to JV: Prohibited if covered under Explanation (c), (d) or (e).

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Divya Jain (Job) (26 Points)
Replied 05 March 2014

Thanks Sir.

If possible, then kindly give example of the case when the loan to JV will be covered under explanation (c), (d) and (e). and whether there is no difference between AOP and Firm for Section 185 of Companies Act, 2013.