Section 180(1)(c) and Loans from Directors

[MADHUMITHA IYER]

Section 180(1)(c) of CA, 2013, prohibits the Board from borrowing in excess of Paid Up Share Capital and Free Reserves unless authorized by the Members vide a Spl. Resolution.  Does this borrowing also include unsecured Loans from Directors.

Rgds,

MI

[CS Simranjeet Singh]

i believe Yes, they are covered also.

 

 

With Best Regards?

Simranjeet Singh

Associate Company Secretary

"To know, is to know that you know nothing. that is the meaning of true knowledge."

 

   

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[MADHUMITHA IYER]

But the language in Section 180(1)(c) seems that it was intended only for Secured Loans from Banks and Financial Institutions.

Rgds,

MI

[CS Simranjeet Singh]

Hi.. in my view Section 180(1)(c) only gives us the authority to borrow in excess of paid up capital and free reserves.. actual borrowing is covered under Section 179(1)(d) under which u can borrow monies upto the limit approved by members u/s 180 (1)(c) via Special resolution in general meeting.. other views also solicited..

[MADHUMITHA IYER]

Yes agree, Sec.180(1)(c) only gives the power and actual borrowing power to be exercised under Section 179(1)(d)

I think better to be safe than sorry and add unsecured loans from Directors as well to arrive at the borrowing powers under Sec.180(1)(c)

[CS Simranjeet Singh]

Yes there is no harm.. rather there is no restriction in law regarding the Limit.. you can avail as much u want.

[Rakesh]

Can anybody send draft Board Resolution for borrowing monies 

[MADHUMITHA IYER]

Section 180(1)(a) - Special Resolution

“RESOLVED THAT pursuant to the provisions of Section 180(1)(a) and other applicable provisions, if any, of the Companies Act, 2013, and the Rules made there under, the consent of the Company be and is hereby accorded to the Board of Directors of the Company (hereinafter referred to as “the Board” which term shall be deemed to include any Committee thereof) to Mortgage and / or Charge, in addition to the Mortgages / Charges created, in such form and manner and with such ranking and at such time and on such terms as the Board may determine, on all or any of the moveable and / or immoveable, tangible and / or intangible properties of the Company, both present and future, including Current Assets and the undertaking(s) of the Company, for securing any borrowings (in Indian currency and/or foreign currency), subject to the limits approved / to be approved under Section 180(1)(c) of the Companies Act, 2013, together with Interest at the respective agreed rates, additional interest, compound interest in case of default, accumulated interest, liquidated damages, commitment charges, all other costs, charges and expenses, including any increase as a result of devaluation / revaluation / fluctuation in the rates of exchanges and all other monies payable by the Company in terms of Loan Agreements, availed or to be availed from Banker(s), Financial Institution(s), Mutual Fund(s) or other lenders, in India or abroad, in favour of such Banker(s), Financial Institution(s), Mutual Fund(s) or other lenders, their agents and trustees, if need be, in respect of such borrowings, on such terms, conditions and covenants as may be stipulated and agreed to between the Board of Directors or Committee thereof and the lender(s) / agent(s) / trustee(s).”

Section 180(1)(c) - Special Resolution

“RESOLVED THAT pursuant to the provisions of Section 180(1)(c) and other applicable provisions, if any, of the Companies Act, 2013, and the Rules made there under, the consent of the Company be and is hereby accorded to the Board of Directors of the Company (hereinafter referred to as “the Board” which term shall be deemed to include any Committee thereof) to borrow, on behalf of the Company, from time to time, in any manner, whether secured or unsecured, such sum or sums of money which together with the monies already borrowed by the Company (apart from temporary loans obtained or to be obtained from the Company’s Bankers in the ordinary course of business) may exceed the aggregate of the Paid Up Share Capital and Free Reserves of the Company, (that is to say, Reserves not set apart for any specific purpose), but the amount so borrowed by the Board, shall not, at any time, exceed Rs.300,000,000/- (Rupees Thirty Crores Only).

RESOLVED FURTHER THAT the Board of Directors of the Company be and are hereby authorized to do all such acts, deeds and things as may be necessary, usual or proper for giving effect to this Resolution.”

Rgds,

MI

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[Aravindh K]

Can someone please share the Board Resolution Format - Resolving to take up this matter before the general body?

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