Legal Question in Business Law in India

AN NBFC takes inter corporate loan from a private limited/limited concern say company no. 1 @12% p.a. and gives it to another private limited/limited say company no. 2 @ 15.30 p.a. Suppose company no. 2 is associate/subsidiary/holding company of No. 1 company or any director of company No.1 is interested in company no. 2 or vice versa. Now query no. 1. is there any violation of rules according to companies act 2013 in giving loan to company no 2 by NBFC by taking loan from company no. 1 ? Now query no. 2 is there any violation of rules according to companies act 2013 if NBFC takes guarantee also from company No. 1 for giving loan to company no. 2?

Thanks in advance,


Asked on 5/06/14, 3:46 am

2 Answers from Attorneys
anuradha Dixit +9312411481 dixitlawfirm

intresting query I am sure You will solve it

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Answered on 5/06/14, 7:59 am
Fca Prashant Chavan Expert Edge LLP

07.05.2014

Dear Sir / Madam,

Section 185 of the new Companies Act, 2013, which is applicable on both private and public limited companies, prohibits a holding company to provide corporate guarantee as a security to a bank for sanctioning loans to its subsidiary. Banking industry is advised to take corporate guarantees from the respective holding or parent companies for the credit facilities / loan being provided to subsidiary company or other smaller group company in accordance with the existing Section 372A of the Companies Act, 1956.

Regards,

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Answered on 5/06/14, 9:40 pm


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