Section 295 of companies act
Savita
(Querist) 25 February 2013
This query is : Resolved
one unlisted public company wants to give corporate guarantee in favour of a private company under same management. The funds has been loaned by bank for working capital. Does it attracts Section 295 of Companies Act.
I have also checked Form 24AB in MCA Website which says that a Declaration to the effect that funds proposed to be loaned are not required for its working capital requirements at least for a year needs to be given.
My question is Company has taken loan for its working capital requirement then how can the company give such a declaration.
My another quesiton is that is it necessary to register the corpoate guarantee in respect of working capital loan.
Raj Kumar Makkad
(Expert) 06 March 2013
In first case the declaration is mandatory and thus if the declaration is false then the company do invite legal complications and in the second case, there is no need for the registration as the banker can provide equatable mortgage without getting it registered before the registrar.
