Loans / Guarantees / Investments (Section 186)
All companies. Inter-corporate loans, investments, guarantees, and security provided to other companies must be within limits (60% of paid-up capital + free reserves + securities premium, or 100% of free reserves + securities premium, whichever is higher). Beyond the limit, a Special Resolution is required.
Rate of interest for inter-corporate loans must not be lower than the prevailing yield of 1 year, 3 year, 5 year, or 10 year Government Security closest to the tenor of the loan. Unanimous Board Resolution required. If limit is exceeded, Special Resolution from shareholders is needed.
Section 186(3), (7), Companies Act 2013
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