clarification on sec 180(1) (d) with respect to sec 185 loans to directors

Question BankCategory: Othersclarification on sec 180(1) (d) with respect to sec 185 loans to directors
mukul asked 5 years ago

sec 180(1)(d) SR is required to remit or give time for repaymentof, any debt due from debtor where as sec 185 restricts any company to give loan to the director . how this is possible. also elaborate 180(1)(d).

2 Answers
Aditya kumar answered 5 years ago

Dear Mukul,
Please read exceptions of section 185.Secton180(1)d shall apply in such cases
Exceptions of 185
Provided that nothing contained in this
sub-section shall apply to—
( a ) the giving of any loan to a
managing or whole-time director—
( i ) as a part of the conditions
of service extended by the
company to all its employees;
or
( ii ) pursuant to any scheme
approved by the members by
a special resolution; or
( 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 bank rate
declared by the Reserve Bank of
India.
Some other exceptions are also there.
Further in all cases even in cases where voilation of section 185 is done still sec 180(1) shall apply.
except private company where neither 185 nor 180 applies.

Raman Saini answered 5 years ago

Section 293 of companies Act 1956 and the new section 180 of Companies act 2013 (w.e.f 12-09-2013) pertained to powers of the Board of Directors which can be exercised only at a general meeting by way of special resolution to be passed for the purpose. Section 180 covers following:
1. Sale or Disposal of Undertaking
2. Investment of money received under merger or amalgamation.
3. borrowing money in excess of aggregate of paid up capital and free reserves.
4. remittance or giving time for repayment of debt due from Directors.
Directors may be made personally liable if such power are exercised without prior approval of members by SR.
Sec 293 was not applicable for a private company. But initially section 180 was applicable to both public and private company But MCA issued a notification dated 05-06-2015, exempting a Private company from the applicability of certain sections including Section 180 & 185 of the 2013 Act.

Your Answer

5 + 3 =