Inter Company Loans under Companies Act, 2013

Inter Company Loans under section 186 of the Companies Act 2013:

  •  No company shall directly or indirectly:
  1. give any loan to any person or other body corporate;
  2. give any guarantee or provide security in connection with a loan to any other body corporate or person; and
  3. acquire by way of subscription, purchase or otherwise, the securities of any other body corporate,

exceeding 60 % of its paid-up share capital, free reserves and securities premium account or 100 % of its free reserves and securities premium account, whichever is more.

  • Where the giving of any loan or guarantee or providing any security or the acquisition under sub-section (2) exceeds the limits specified in that sub-section, prior approval by means of a special resolution passed at a general meeting shall be necessary.
  •  The company shall disclose to the members in the financial statement the full particulars of the loans given, investment made 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.
  •  No loan shall be given under this section at a rate of interest lower than the prevailing yield of one year, three year, five year or ten year Government Security closest to the tenor of the loan.
  •  No company which is in default in the repayment of any deposits accepted before or after the commencement of this Act or in payment of interest thereon, shall give any loan or give any guarantee or provide any security or make an acquisition till such default is subsisting.