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surajkumar vishwakarma   05 September 2022

I had a Query A financial institution has given loan to a company and there the promoter has given an undertaking that the company will not dispose off his shares until the loan is repaid

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I had a Query
A financial institution has given loan to a company and there the promoter has given an undertaking that the company will not dispose off his shares until the loan is repaid.
What is the validity of this undertaking? As this is not a pledge or something just an undertaking? Can action be taken if it is breached tomorrow


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 1 Replies

Dr J C Vashista (Advocate)     05 September 2022

The undertaking given by promotors is as good as affidavit.

Despite the fact it (undertaking) is not pledge / hypothetical document yet it is valid and legal document.

The financial institution has the right to invoke covenants of undertaking.


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