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Suhita Mukherjee   03 July 2020

Query for corporate guarantee

Dear sir In case of bank loan to company LTD by shares when another company stand as guarantor requirement board resolution of the company giving guarantee and Roc charge to be registered for the company giving guarantee in favor of the bank.Is it?


 3 Replies

G.L.N. Prasad (Retired employee.)     04 July 2020

The guarantor is having equal responsibility till the loan is repaid, and many banks insist for registering the charge with ROC even in case of guarantee by one corporate to another corporate, The other corporate should also show the entry as a contingent liability in the balance sheet.  Mostly these things happen when the directors of the borrowing company is interested in other corporate also, and due to several incidents of siphoning one company amount to another company.

Dr J C Vashista (Advocate)     04 July 2020

Yes, it is required to be registered with ROC.

YoungMA   07 July 2020

In complicated cases of bank loans, seo options can be of great help, you can read a little more about them.

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