Section 295 and 372A of the Companies Act 1956


06 July 2011

Dear Professionals

Sec 295 of the Companies Act 1956 does not allow Public Limited Company to give any guarantee to any person , but my question is that our CS says that there is a specific section which states that a Public Limited Company can be a guarantor if the loan is certain % of company's paid up capital.

Sec 372A says that Intercorporate guarantees are permitted under this section, but please clarify Can a Public Limited Company give a guarantee to loans availed by its employees from a Cooperative Bank, if yes under what section of the Companies Act and what are the conditions to be satisfied.

Waiting for reply as our employees have taken Loan/OD facility from a cooperative and the Company is willing to be a Guarantor for the same.


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