Section 185 Loan to directors
- Amendments
- 1
- Last changed
- 7 May 2018
Substituted by Companies (Amendment) Act, 2017, s. 61, with effect from 7 May 2018. Earlier read: "section 185"185. Loans to directors, etc.—
Substituted by Companies (Amendment) Act, 2017, s. 61, with effect from 7 May 2018. Earlier read: "section 185"(1) No company shall, directly or indirectly, advance any loan, including any loan represented by a book debt to, or give any guarantee or provide any security in connection with any loan taken by,—
Substituted by Companies (Amendment) Act, 2017, s. 61, with effect from 7 May 2018. Earlier read: "section 185"(a) any director of company, or of a company which is its holding company or any partner or relative of any such director; or
Substituted by Companies (Amendment) Act, 2017, s. 61, with effect from 7 May 2018. Earlier read: "section 185"(b) any firm in which any such director or relative is a partner.
Substituted by Companies (Amendment) Act, 2017, s. 61, with effect from 7 May 2018. Earlier read: "section 185"(2) A company may advance any loan including any loan represented by a book debt, or give any guarantee or provide any security in connection with any loan taken by any person in whom any of the director of the company is interested, subject to the condition that—
Substituted by Companies (Amendment) Act, 2017, s. 61, with effect from 7 May 2018. Earlier read: "section 185"(a) a special resolution is passed by the company in general meeting:
Substituted by Companies (Amendment) Act, 2017, s. 61, with effect from 7 May 2018. Earlier read: "section 185"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
Substituted by Companies (Amendment) Act, 2017, s. 61, with effect from 7 May 2018. Earlier read: "section 185"(b) the loans are utilised by the borrowing company for its principal business activities.
Substituted by Companies (Amendment) Act, 2017, s. 61, with effect from 7 May 2018. Earlier read: "section 185"Explanation.—For the purposes of this sub-section, the expression “any person in whom any of the director of the company is interested” means—
Substituted by Companies (Amendment) Act, 2017, s. 61, with effect from 7 May 2018. Earlier read: "section 185"(a) any private company of which any such director is a director or memberDefined in section 2(55): member, in relation to a company, means the subscriber to the memorandum entered in the register of members, every other person who agrees in writing to become a member and is entered in the register of members, and every person holding shares whose name is entered as a beneficial owner in depository records.;
Substituted by Companies (Amendment) Act, 2017, s. 61, with effect from 7 May 2018. Earlier read: "section 185"(b) any body corporate at a general meeting of which not less than twenty-five per cent. of the total voting power may be exercised or controlled by any such director, or by two or more such directors, together; or
Substituted by Companies (Amendment) Act, 2017, s. 61, with effect from 7 May 2018. Earlier read: "section 185"(c) any body corporate, the Board of directors, managing director or manager, whereof is accustomed to act in accordance with the directions or instructions of the Board, or of any director or directors, of the lending company.
Substituted by Companies (Amendment) Act, 2017, s. 61, with effect from 7 May 2018. Earlier read: "section 185"(3) Nothing contained in sub-sections (1) and (2) shall apply to—
Substituted by Companies (Amendment) Act, 2017, s. 61, with effect from 7 May 2018. Earlier read: "section 185"(a) the giving of any loan to a managing or whole-time director—
Substituted by Companies (Amendment) Act, 2017, s. 61, with effect from 7 May 2018. Earlier read: "section 185"(i) as a part of the conditions of service extended by the company to all its employees; or
Substituted by Companies (Amendment) Act, 2017, s. 61, with effect from 7 May 2018. Earlier read: "section 185"(ii) pursuant to any scheme approved by the members by a special resolution; or
Substituted by Companies (Amendment) Act, 2017, s. 61, with effect from 7 May 2018. Earlier read: "section 185"(b) a company which in the ordinary course of its business provides loans or gives guarantees or securities for the due repayment of any loan and in respect of such loans an interest is charged at a rate not less than the rate of prevailing yield of one year, three years, five years or ten years Government security closest to the tenor of the loan; or
Substituted by Companies (Amendment) Act, 2017, s. 61, with effect from 7 May 2018. Earlier read: "section 185"(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
Substituted by Companies (Amendment) Act, 2017, s. 61, with effect from 7 May 2018. Earlier read: "section 185"(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:
Substituted by Companies (Amendment) Act, 2017, s. 61, with effect from 7 May 2018. Earlier read: "section 185"Provided that the loans made under clauses (c) and (d) are utilised by the subsidiary company for its principal business activities.
Substituted by Companies (Amendment) Act, 2017, s. 61, with effect from 7 May 2018. Earlier read: "section 185"(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,—
Substituted by Companies (Amendment) Act, 2017, s. 61, with effect from 7 May 2018. Earlier read: "section 185"(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;
Substituted by Companies (Amendment) Act, 2017, s. 61, with effect from 7 May 2018. Earlier read: "section 185"(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
Substituted by Companies (Amendment) Act, 2017, s. 61, with effect from 7 May 2018. Earlier read: "section 185"(iii) the director or the other person to whom any loan is advanced or guarantee or security is given or provided in connection with any loan taken by him or the other person, shall be punishable with imprisonment 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, or with both.