Naveen Manghani (CS) 03 December 2009
Dear All,
A holding company (public company) plans to give loan to its holding company (private company), with no common directors. Will this attract the provisions of Section 295 of the Companies Act or only Section 372A? Also, kindly let me know any other provisions involved in this transaction.
Regards,
Naveen
Naveen Manghani (CS) 03 December 2009
a small correction - subsidiary company (public company) wants to give loan to its holding company, which is private company
Asha Pole (Legal) 03 December 2009
Naveen, infact your second update is even more confusing... since sec 372 A (loans and investment) is not applicable to private company but if the private is a subsidiary to a public company, it's only then the loan can be made.
Since the company is making loan to a corporate ,it shall comply with the provision of sec 372A only. And as per section 295 of the companies act,loan given directly or indirectly to a director on approval of CG is not applicable in your case, you will have to comply with only sec 372A
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