![\"Inter](\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/06\/Inter-Corporate-Loans.jpg\")
<\/figure><\/div>\n\n\n\nWhat is the Applicability for Inter Corporate Loans?<\/h2>\n\n\n\n
According to the Companies Act, 2013<\/strong>[1]<\/strong><\/a><\/sup> investments cannot be made through more than two layers of companies. According to the same, the word investment implies to:<\/p>\n\n\n\n Also, it does not include:<\/p>\n\n\n\n The\nnon-applicability to follow the provisions of section 186(subsection 1) is for\nthe following cases;<\/p>\n\n\n\n The non-applicability to follow these provisions except subsection 1 of the section 186 is for the following cases;<\/p>\n\n\n\n Also, a defaulter\ncompany in terms of payment of interest cannot provide loans to any other\ncompany.<\/p>\n\n\n\n A company can provide a loan or invest by passing a special resolution in the Annual General Meeting. In this meeting, if all the board members agree for the same, then only the loan\/investment can be given.<\/p>\n\n\n\n The company needs to disclose to the directors, accordingly about <\/p>\n\n\n\n And the notice of\nthe general meeting for passing the resolution should stipulate the following;<\/p>\n\n\n\n A company should\nnot provide a loan at a rate less than the yield of the previous one, three,\nfive or ten years whichever is the closest to the tenure of the given loan.<\/p>\n\n\n\n According to section 186, subsection 9, The Companies Act 2013, every company has to maintain a record of the loan given in a register containing all the prescribed details,subsequently. And furthermore,according to subsection 10, the registry should be kept at the registered office for inspection by the concerned department. <\/p>\n\n\n\n As the rule, if any corporation fails to comply with this act has to pay a fine of Rs 25000 to Rs 5 lakhs, and the officer at default has to pay a fine ranging from Rs. 25000 to Rs. 1 lakh consequently.<\/p>\n\n\n\n A Company can\nprovide a loan to an individual or other corporate body under the norms contained\nin The Companies Act 2013. Sub-section 2, Section 186 specifies that a company\ncan give loan to a person or a body corporate of less than sixty percent of paid\nup capital share, free reserves and securities premium account or less than hundred\nper cent of the free reserves and securities premium account, whichever is\nmore.<\/p>\n\n\n\n A company can give loan to partnership firms<\/a> following the prescribed rules given in the Companies Act 2013. According to the section 185, sub-section 1, the act defines that a company can give loan to body corporate including the LLPs<\/a>.<\/p>\n\n\n\n According to Section 185 of the Companies Act, 2013, no company can provide a loan to shareholders possessing 2% or more shares of the company. <\/p>\n\n\n\n Companies Act, 2013. The section 185, sub-section 1, specifies that a director or “any other person in which the director is interested” a company cannot give lone to such people, where “any other person in which the director is interested” means;<\/p>\n\n\n\n Several changes were made through section 186, Companies Act 2013, which previously was section 372A, in the Companies Act 1956. When we compare the both, we can see that many provisions were made and simplified. Also, amendments were done according to the latest needs and requirements of companies. <\/p>\n\n\n\nWhat is the Non-Applicability for Inter-Corporate Loans?<\/h2>\n\n\n\n
All about\nApproval from Members<\/h2>\n\n\n\n
What are\nthe Requirements for the Disclosure of Particulars of Loan?<\/h2>\n\n\n\n
What is the\nRate of Interest for Inter-Corporate Loans?<\/h2>\n\n\n\n
What is the\nProcess of Keeping a Record of Inter-Corporate Loans?<\/h2>\n\n\n\n
Fine for\nthe Violation of Section 186<\/h2>\n\n\n\n
Can a Company\ngive a Loan to an Individual?<\/h2>\n\n\n\n
Can a Company\ngive Loan to LLPs?<\/h2>\n\n\n\n
Can a\nPrivate Limited Company give Loan to Shareholders?<\/h2>\n\n\n\n
Can a Company\ngive Loan to another Private Limited Company?<\/h2>\n\n\n\n
Disclaimer<\/h2>\n\n\n\n