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Jayanta Bandyopadhyay   22 August 2024

Section 180(1)(a) of co act 2013 meaning

As a part of CA certificate to lending bank, our auditor at our request (borrower) requires to give a declaration to the effect that assets being charged by security provider (borrower- we) do not constitute an undertaking or substantially the who;e of the undertaking as defined u/s.180(1)(a) of the Companies Act.

We are parent company and holding multiple wholly owned subsidiary and there is a LLP/Pvt Ltd Company, all controlled by us (unlisted public ltd co)

What is the meaning of the first paragraph.

Kindly guide



Learning

 1 Replies

T. Kalaiselvan, Advocate (Advocate)     22 August 2024

Section 180(1)(a) of the Companies Act, 2013 states that a company can sell, lease, or otherwise dispose of its undertaking or any of its undertakings if it owns more than one. However, the company must first obtain prior approval from a special resolution.

You may be required to give an undertaking through your CA on the following lines:

The section also provides numerical criteria to define what constitutes an undertaking: 
 
  • An undertaking where the company's investment exceeds 20% of its net worth as per the previous financial year's audited balance sheet 
     
  • An undertaking that generates 20% of the company's total income during the previous financial year 
     
  • "Substantially the whole of the undertaking" means 20% or more of the undertaking's value as per the previous financial year's audited balance sheet

You may  your auditor and proceed as suggested


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