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    Question

    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 if__________________
    A A special resolution is passed by the company in general meeting Correct Answer Incorrect Answer
    B An ordinary resolution is passed by the company in the general meeting Correct Answer Incorrect Answer
    C The loans are utilised by the borrowing company for its principal business activities Correct Answer Incorrect Answer
    D Both (a) & (c) Correct Answer Incorrect Answer
    E Both (b) & (c) Correct Answer Incorrect Answer

    Solution

    Section185. Loan to directors, etc,- (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— (a) a special resolution is passed by the company in general meeting: 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 (b) the loans are utilised by the borrowing company for its principal business activities. 

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