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    Applicability of Section 186 for pvt company

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    Carishma Patney

    Posts : 1
    Join date : 2014-03-30

    Applicability of Section 186 for pvt company

    Post by Carishma Patney on Mon Mar 31, 2014 1:21 pm

    I hv a pvt company whose subsidiary is also a pvt company having 1 director in common. This holding company lends money to its subsidiary company every month for the purpose of working capital. The amt of the same is nt fixed.

    Plz tell me the applicability of section 185 and 186 under Companies act 2013 for this type of transaction between such pvt companies.
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    kumavat

    Posts : 1
    Join date : 2014-04-15

    Re: Applicability of Section 186 for pvt company

    Post by kumavat on Tue Apr 15, 2014 12:21 pm

    Section 185 will not be attracted in this case. A holding company can give loan to its subsidiary even if there are common directors in holding and subsidiary.
    As far as section 186 is concerned, sub-section 3 will not be applicable (i.e. passing special resolution in case limits exceeds as mentioned in sub-section 2) but borrower-subsidiary needs to pay interest to holding as per section 186(7).
    In case the answer is not clear pls revert.
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    gaurav_kp@hotmail.com

    Posts : 1
    Join date : 2014-07-29

    Re: Applicability of Section 186 for pvt company

    Post by gaurav_kp@hotmail.com on Tue Jul 29, 2014 3:02 pm

    Section 185 will be not applicable only in the case when the subsidiary company is wholly owned subsidiary company and the amount of loan should be used only for principal business of the subsidiary company.

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