Question

Under Section 186(2) of the Companies Act, 2013, a company shall not, directly or indirectly, give any loan, give any guarantee or provide any security in connection with a loan, or acquire the securities of any body corporate, exceeding -

Q: Answer-Under Section 186(2) of the Companies Act, 2013, a company shall not, directly or indirectly, give a...

Section 1862 provides that no company shall directly or indirectly a give any loan to any person or other body corporate b give any guarantee or provide any security in connection with a loan to any other body corporate or person or c acquire the securities of any other body corporate, exceeding sixty per cent of its paid-up share capital, free reserves and securities premium account, or one hundred per cent of its free reserves and securities premium account, whichever is more. Sub-section 3 requires the prior approval of the company by a special resolution for such loans, guarantees or acquisitions, and sub-section 4 mandates disclosure of the full particulars in the financial statements.

A fifty per cent of the paid-up share capital and free reserves of the company.

B seventy-five per cent of the securities premium account alone.

C the aggregate of the paid-up capital and the reserves of the company.

D sixty per cent of the paid-up share capital, free reserves and securities premium account, or one hundred per cent of free reserves and securities premium, whichever is higher.

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