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Resolution required details to be given by company in application for approval - Companies Law - No. 13(105)CL‑VI/67,Extract Circular : No. 13(105)CL ‑ VI/67, dated 31 ‑ 10 ‑ 1968. Subject:- Resolution required d etails to be given by company in application for approval The erstwhile Department of Company Law Administration had issued instructions regarding the passing of special resolutions under the various sections of the Act. The said letter, inter alia, provided that in the case of resolutions to be passed under section 370 (as it stood then), an analysis containing the following details should be given : 1. The purposes for which the loans coming under the purview of this section were granted, i.e., whether for development or current expenditure, working capital, or in lieu of bank finance or for reinvestment in or purchase of shares. 2. The rate of interest charged on such loans and period of loans. 3. The maximum amount of the loan granted by a single company and the proportion it bears to the paid‑up capital of that company. 4. The relationship between the lending company and the body corporate to which the loan is granted. 5. Whether in the past also the lending company has been accustomed to lend to the borrowing company. 6. Any other remarks called for as a result of the analysis. As section 370 has been extensively amended by the Companies (Amendment) Act, 1965 and has come into force with effect from April 1, 1967, in its amended form, the position with regard to the passing of special resolution has been reviewed by the Department particularly in view of the Explanation below sub‑section (1) of the said section. It has not been decided that a. in case the loan is proposed to be given up to 20 per cent or 30 per cent, as the case may be, of the subscribed capital and free reserves of the lending company, it is not necessary for the lending company to set out the material terms of each individual loan in the special resolution to be passed under section 370; and b. in cases, where it is proposed to make loans in excess of the limit of 20 per cent or 30 per cent, as the case may be, for which approval of the Central Government is also required to be obtained, it would be necessary for the lending company either to disclose the material terms of each individual loan, i.e., name of the borrowing company, amount of loan proposed to be given, nature and value of the security offered, rate of interest proposed to be charged, etc., or to specify a certain limit in clear terms up to which the limits prescribed in sub‑section (1) of section 370 can be made, in the special resolution to be passed by lending company. The full details of the loan will, of course, have to be given in the application to be made to the Central Government/Company Law Board for obtaining approval under section 370(1).
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