TMI BlogLoans to directors, etcX X X X Extracts X X X X X X X X Extracts X X X X ..... y of the director of the company is interested, subject to the condition that- (a) a special resolution is passed by the company in general meeting: Provided that the explanatory statement to the notice for the relevant general meeting shall disclose the full particulars of the loans given, or guarantee given or security provided and the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient of the loan or guarantee or security and any other relevant fact; and (b) the loans are utilised by the borrowing company for its principal business activities. Explanation.-For the purposes of this sub-section, the expression any person in whom any of the director of the company is interested means ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f loan made by any bank or financial institution to its subsidiary company: Provided that the loans made under clauses (c) and (d) are utilised by the subsidiary company for its principal business activities. (4) If any loan is advanced or a guarantee or security is given or provided or utilised in contravention of the provisions of this section,- (i) the company shall be punishable with fine which shall not be less than five lakh rupees but which may extend to twenty-five lakh rupees; (ii) every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than five lakh rupees but which may extend to twenty-five lakh rupees; and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harged at a rate not less than the bank rate declared by the Reserve Bank of India. 1 [(c) any loan made by a holding company to its wholly owned subsidiary company or any guarantee given or security provided by a holding company in respect of any loan made to its wholly owned subsidiary company; or (d) any guarantee given or security provided by a holding company in respect of loan made by any bank or financial institution to its subsidiary company: Provided that the loans made under clauses (c) and (d) are utiised by the subsidiary company for its principal business activities.] Explanation.-For the purposes of this section, the expression to any other person in whom director is interested means- (a) any director of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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