INDEPENDENT DIRECTORS AND SHAREHOLDERS AS PERSONAL GUARANTORS

[ginny uppal92]

Dear all,

Please advise if an Independent Director of the company can give personal guarantee for a term loan taken by the company. Will it not affect his independence? 

Also, can a shareholder, who is a related party of the director, give personal guarantee for a loan taken by the company?  

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Thanks & Regards

Ginny Uppal

Company Secretary

Mobile- 98039-56306

Email- ginnyu...@gmail.com

[ginny uppal92]

Thanks for the reply. 

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Thanks & Regards

Ginny Uppal

Company Secretary

Mobile- 98039-56306

Email- ginnyu...@gmail.com

On Sat, Jun 5, 2021 at 11:43 AM Ruchi Agrawal <ruchiag...@gmail.com> wrote:

As per section 149(6) , independent director can not be in any pecuniary relationship with company, otherwise he is ineligible for being independent director.

Thanks & Regards, 

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[Rajesh]

When it comes to independent director, giving guarantee will affect his independence. It will create a pecuniary relationship between the company and the director.

However, providing personal guarantee by the shareholder may be accepted. But the Bank should be in a position to accept his personal guarantee. There is no issue.

Otherwise views are solicited.

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[ginny uppal92]

Thank you for the reply sir.

According to me, a promoter shareholder can give guarantee on behalf of the company. 

But yes, a guarantee given by an ID will affect his independence. 

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Thanks & Regards

Ginny Uppal

Company Secretary

Mobile- 98039-56306

Email- ginnyu...@gmail.com

To view this discussion on the web visit https://groups.google.com/d/msgid/csmysore/CABY9iyg1V6EQGLoxqX-yfR8eoY%3DpM3LkRD4bcoDH_OoKPm9nQA%40mail.gmail.com.

[Rajesh]

Correct. Banks will accept personal guarantee of Promoter directors.

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