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Section 185 of companies act 2013

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Rohit Vyas

Internal Auditor

30 Points Joined December 2007

Dear Member,

There is lots of confusions over interpretation of sentence "ordinary course of business", under section 185 of New Companies Act.

There are no exemptions for private companies. Thus, in case a private co. engaged in manufacturing of goods gives gurantees to bank for loan to another pvt. company (not subsidary), this will be in contravention of Sec.185.

And both companies have common directors.

Please comment.

Regards

Rohit

Replies (1)

P C Agrawal

Registered independent director Past Ch

8229 Points Joined March 2007

Yes, Section 185 of Companies Act 2013 which has already come into force has created lot of practical difficulty for corporate sector. The Govt has not issued any exemption notification for private companies exercising its powers u/s 462 of the Act. Let us wait for the some more time till whole Act comes into force and see whether Govt comes out with any such exemption notification.