TMI BlogInter-corporate loans and investments.X X X X Extracts X X X X X X X X Extracts X X X X ..... he loans and investments so far made, the amounts for which guarantee or security so far provided to or in all other bodies corporate, along with the investment, loan, guarantee or security proposed to be made or given by the Board, exceeds the aforesaid limits, no investment or loan shall be made or guarantee shall be given or security shall be provided unless previously authorised by a special resolution passed in a general meeting: Provided further that the Board may give guarantee, without being previously authorised by a special resolution, if, ___ (a) a resolution is passed in the meeting of the Board authorising to give guarantee in accordance with the provisions of this section; (b) there exists exceptional ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no default in repayment of loan instalments or payment of interest thereon as per the terms and conditions of such loan to the public financial institution. (3) No loan to any body corporate shall be made at a rate of interest lower than the prevailing bank rate, being the standard rate made public under section 49 of the Reserve Bank of India Act, 1934 (2 of 1934). (4) No company, which has defaulted in complying with the provision of section 58A, shall, directly or indirectly ,___ (a) make any loan to any body corporate; (b) give any guarantee, or provide security, in connection with a loan made by any other person to, or to any other person by, any body corporate; and (c) acquire, by way of subscript ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnment may, prescribe guidelines for the purposes of this section. ___ (8) Nothing contained in this section shall apply, ___ (a) to any loan made, any guarantee given or any security provided or any investment made by (i) a banking company, or an insurance company, or a housing finance company in the ordinary course of its business, or a company established with the object of financing industrial enterprises, or of providing infrastructural facilities; (ii) a company whose principal business is the acquisition of shares, stock, debentures or other securities; (iii) a private company, unless it is a subsidiary of a public company; (b) to investment made in shares allotted in pursuanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of sub-section (5), the company and every officer of the company who is in default shall be punishable with fine which may extend to five thousand rupees and also with a further fine which may extend to five hundred rupees for every day after the first during which the default continues. Explanation . For the purposes of this section, ___ (a) "loan" includes debentures or any deposit of money made by one company with another company, not being a banking company; (b) "free reserves" means those reserves which, as per the latest audited balance sheet of the company, are free for distribution as dividend and shall include balance to the credit of the securities premium account but shall not include share appl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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