Checklist for Loan to Directors etc under Companies Act 2013.

Section 185- loans to directors or to any other person in whom the director is interested or to give guarantee or provide security with any loan taken by director or such other person Section 185(1) Provisions of Sections Checklist Save as otherwise provided in this Act, I. Provisions of Section 185 of the Companies no company shall, directly or indirectly, Act, 2013 shall apply to all companies if, advance any loan, including any loan point (a) of the checklist along with atleast represented by a book debt, to any of one of the sub-points within point (b) is YES its directors or to any other person in YES NO whom the director is interested or give (a) (i) Whether there is direct: any guarantee or provide any security in connection with any loan taken by Loan {including book debt} him or such other person: Guarantee for loan Security for loan OR (ii) Whether there is indirect: Loan {including book debt} Guarantee for loan Security for loan

Explanation Expression - to any other person in whom director is interested means (a)

(a) Whether the loan and security given or guarantee provided to : (i) Director of lending Co.

any director of the lending company, or of a company which (ii) Directoris its holding company or any Holding co. of lending partner or relative of any such Company director; Directors mentioned in point (i) and (ii) hereinafter referred to as aforesaid directors (iii) Partner of aforesaid directors

YES (iv) Relative of aforesaid directors (b) any firm in which any such director (v) Any partnership firm in which aforesaid Director or relative is a partner; is partner (vi) Any partnership firm in Which aforesaid Directors relative is partner (c) any private company of which any (vii) a private Company in such director is a director or which aforesaid Director member; is Director/Shareholder (d) any body corporate at a general (viii) a Body Corporate meeting of which not less than (Includes foreign co. twenty five per cent. of the total and Indian Co.) voting power may be exercised or AND controlled by any such director, or by two or more such directors, Whether 25% of the total Voting Power exercised or together; or controlled by aforesaid director or by aforesaid two or more directors jointly
(e) any body corporate, the Board of

NO

(ix) a Body Corporate directors, managing director or manager, whereof is accustomed to act in accordance with the AND directions or instructions of the Board, or of any director or Whether BOD/MD/Manager directors, of the lending company. is accustomed to act as per the instructions/ Directions of Board/ any Director or Director(s) of LENDING COMPANY EXCEPTIONS

Proviso

Provided that nothing contained in this sub-section shall apply to :

II. Provisions of Section 185 of the Companies act, 2013 shall not apply where, BOTH sub points (a) and (b) are YES: Where the loan is given to (Guarantee/Security for loan are not exempted)

(a) the giving of any loan to a managing

or whole-time director-

a) MD/WTD

YES AND
(i) as a part of the conditions of service

NO

extended by the company to all its employees; or

b) Whether giving of loan is a part of employment rules rules applicable to all the employees OR

(ii) pursuant to any scheme approved by

the members by a special resolution; or

Whether the loan is given as per scheme approved by the shareholders by special resolution

(b) a company which in the ordinary Not Applicable to Ansal Properties and course of its business provides loans or Infrastructure Limited or its group Companies 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.

185(2)

If any loan is advanced or a guarantee Penal Provisions or security is given or provided in If the aforesaid conditions are not satisfied then, contravention of the provisions of sub(i) the Company shall be punishable with section (1), the company shall be a fine between Rs. 05 lacs and Rs. 25 punishable with fine which shall not be lacs; less than five lakh rupees but which may extend to twenty-five lakh rupees, (ii) the Director or the other person to and the director or the other person to whom the loan/guarantee/Security is whom any loan is advanced or given or provided, shall be punishable guarantee or security is given or with : provided in connection with any loan a) imprisonment with may extend taken by him or the other person, shall to six months; or be punishable with imprisonment b) fine Minimum Rs. 05 lacs and which may extend to six months or with Maximum Rs. 25 lacs; fine which shall not be less than five or both lakh rupees but which may extend to twenty-five lakh rupees, or with both.

PLEASE NOTE THAT PROHIBITIONS ARE ABSOLUTE AND NO RATIFICATION OR APPROVAL OF CENTRAL GOVERNMENT IS PERMITTED. Date : 30th November, 2013