Section 185 companies act, 2013
Anand Sharma
(Querist) 09 July 2015
This query is : Resolved
Who can file a complain against a company which gives loan to its director or guarantee for directors other company?
shivam......
(Expert) 19 September 2015
With the new regime in place with respect to loans to directors, it is to be known that no company can offer loan to its directors except in case such director is a managing director or a whole time director and such proposed loan is either a part of the conditions of service extended by the company to all its employees; or pursuant to any scheme approved by members vide special resolution, or such company is in the business of extending loans. The provisions of Section 185 of the Companies Act, 2013 does not provide any exemption to a private company as provided in the provisions of Section 295 earlier. However, the company whose primary business is that of lending is exempted from the provisions of Section 185 of the Companies Act, 2013. The said change is anticipated to bring the better governance & transparency in the affairs of the Companies in the light of the applicable laws keeping in view the fiduciary character of the directors of the Company.In case of contravention of this section, the Lending Company shall be punishable with a minimum fine of Rs.5 lacs but which may extend to Rs.25 lacs;
On Recipient Director/ Entity
In case of contravention of this section, the recipient Director or other entity shall be punishable with imprisonment which may extend to six months or with a minimum fine of Rs.5 lacs but which may extend to Rs.25 lacs, or with both.
