Corporate Guarantee
Iqbal Singh
(Querist) 16 November 2009
This query is : Resolved
There is a case in front of me where in two companies are the co-owners of the same land (say 10000 sq mtrs). Both are companies are group company. Amongst both company, one company is public limited company (LISTED) (named A having 40% share in land) and other is also Limited company (UNLISTED) (named B having 60% share in land). A and B have bifurcated their area with embarking the different sale deed specifying the area. Now A and B company has borrowed loan from Bank. Same piece of land will be mortgaged with both the bankers. According to one of the Advocate, both the company has to execute the mortgage deed on full 10000 sq mtrs of land rather than on their share as its difficulat to set boundaries for both the companies. Option given by the advocate are:
1. Execute separate sale deed demarking the area or
2. Pass a board resolution by both the companies (for full area of land) and both the companies will have to present during mortgage execution.
First iption is not feasible due to some mangement option. However, if second option is opted for, the concerned of A company is that it will amount to Corporate guarantee given by one company to another and prior approval of Central governemet will be required in case of A company.
Kindly let me know if the above is true. If yes, is there any notification or section is available which can avoid taking prior approval of Central government for execution of Mortgage deed.
Please do the needful and its required urgently.
Thanks
Raj Kumar Makkad
(Expert) 16 November 2009
Definitely it shall be a corporate guarantee for the company A which requires prior permission from Central Govt. and there is no such citation/rule/scheme which may be helpful in your case to exonerate such requirement.
Iqbal Singh
(Querist) 17 November 2009
Thanks Sir....
You mail made me confident.
Again Thanks
