Rani Jain (Company Secretary) (25 Points)
23 April 2010Company A is listed Company providing Corporate guarantee to Company B which is closely held public company .In Both the Company the managing Director is a same person. Company A is holding shares in Company B of 16% and its directors around 30% .My query is whether 295 Section is applicable?
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 23 April 2010
Hi,
In your case section 295 loan to director is not applicable. The same transaction is governed by section 372A which covers inter-corporate loan, guarantee, security and investment.
However disclosure of interest u/s 299 by the concerned director is must along with the compliance of section 300 and 301.
Thanks
Himanshu Gupta
(Article Assistant)
(39 Points)
Replied 24 April 2010
Hi Rani,
Company B is a specified person u/s 295(1)(e), since co. B is a body corporate in which 25% or more Voting power is held by 1 or more directors of Company A, thus, Sec.295 is applicable in the given case and the co. B shall take Prior approval of CG.
Provisions of sec 299, 300 & 372A shall also be complied.
Regards,
Himanshu Gupta
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