Corporate Guarantee
SARAVANAN.R
(Querist) 16 December 2009
This query is : Resolved
Can you please help in understanding about Corporate Guarantee.
If a public Limited Company proposes to give Corporate Guarantee to Bank for giving loans to another private company,
any approval of shareholders is needed?
When is the approval of the shareholders needed. Whether it can be obtained by Postal Ballot.
Is there any prior approval required from Central Government in addition to the above under Section 295 or just approval from Central Government is only needed to enable the Company proceed in the matter
Kindly clarify.
Saravanan
Guest
(Expert) 18 December 2009
Though, you can very well find the answer to your query by referring the provisions relating to the powers of the Board and the decisions to be taken only at the AGM, first of all, the Central Government can not have any say ignoring the interests of the shareholders. Because, the company belongs to shareholders and not the central government. A resolution is certainly needed for giving such a guarantee and I don't think that it is so typical issue. By reading the provisions, you can get the clear picture.
