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Checklist for Loan to Directors etc under Companies Act 2013.

Section 185- loans to directors or to any other person in whom the director

is interested or to give guarantee or provide security with any loan taken

by director or such other person

Section Provisions of Sections Checklist

185(1)

Explanation

Save as otherwise provided in this Act,

no company shall, directly or indirectly,

advance any loan, including any loan

represented by a book debt, to any of

its directors or to any other person in

whom the director is interested or give

any guarantee or provide any security

in connection with any loan taken by

him or such other person:

Expression - to any other

person in whom director is interested

means

(a) any director of the lending

company, or of a company which

is its holding company or any

partner or relative of any such

director;

I. Provisions of Section 185 of the CompaniesAct, 2013 shall apply to all companies if,

point (a) of the checklist along with atleast

one of the sub-points within point (b) is YES

YES NO

(a) (i) Whether there is direct:Loan{including book debt}

Guarantee for loan

Security for loan

OR

(ii) Whether there is indirect:

Loan{including book debt}

Guarantee for loan

Security for loan

(a)Whether the loan and security given orguarantee provided to :

(i) Director of lending Co.(ii) Director-

Holding co. of lending

Company

Directors mentioned in point (i) and (ii)

hereinafter referred to as aforesaid directors

(iii)Partner ofaforesaid directors

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Proviso

(b) any firm in which any such director

or relative is a partner;

(c) any private company of which any

such director is a director or

member;

(d

) any body corporate at a generalmeeting of which not less than

twenty five per cent. of the total

voting power may be exercised or

controlled by any such director, or

by two or more such directors,

together; or

(e) any body corporate, the Board of

directors, managing director or

manager, whereof is accustomedto act in accordance with the

directions or instructions of the

Board, or of any director or

directors, of the lending company.

Provided that nothing contained in this

sub-section shall apply to :

(a) the giving of any loan to a managing

or whole-time director-

YES NO

(iv)Relative ofaforesaid directors

(v) Any partnership firm inwhich aforesaid Director

is partner

(vi)Any partnership firm inWhich aforesaid

Directorsrelative is partner

(vii)a private Company inwhichaforesaid Director

is Director/Shareholder

(viii)a Body Corporate(Includes foreign co.and Indian Co.)

AND

Whether 25% of the total

Voting Power exercised or

controlled by aforesaid director

or by aforesaid two or more directors jointly

(ix) a Body Corporate

AND

Whether BOD/MD/Manager

is accustomed to act as per

the instructions/ Directions

of Board/ any Director or

Director(s) of LENDING COMPANY

EXCEPTIONS

II. Provisions of Section 185 of the Companiesact, 2013 shall not apply where, BOTH subpoints (a) and (b) are YES:

Where the loan is given to

(Guarantee/Security for loan are not exempted)

a) MD/WTD

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PLEASE NOTE THAT PROHIBITIONS ARE ABSOLUTE AND NO RATIFICATION OR APPROVAL OF CENTRAL

GOVERNMENT IS PERMITTED.

Date : 30th

November, 2013

185(2)

(i) as a part of the conditions of service

extended by the company to all its

employees; or

(ii) pursuant to any scheme approved by

the members by a special resolution;

or

(b) a company which in the ordinary

course of its business provides loans or

gives guarantees or securities for thedue repayment of any loan and in

respect of such loans an interest is

charged at a rate not less than the bank

rate declared by the Reserve Bank of

India.

If any loan is advanced or a guarantee

or security is given or provided in

contravention of the provisions of sub-

section (1), the company shall bepunishable with fine which shall not be

less than five lakh rupees but which

may extend to twenty-five lakh rupees,

and the director or the other person to

whom any loan is advanced or

guarantee or security is given or

provided in connection with any loan

taken by him or the other person, shall

be punishable with imprisonment

which may extend to six months or with

fine which shall not be less than five

lakh rupees but which may extend to

twenty-five lakh rupees, or with both.

YES NO

AND

b) Whether giving of loanis a part of employment rules

rules applicable to all theemployees

OR

Whether the loan is

given as per scheme

approved by the shareholders

by special resolution

Not Applicable to Ansal Properties and

Infrastructure Limited or its group Companies

Penal Provisions

If the aforesaid conditions are not satisfied then,

(i) the Companyshall be punishable witha fine between Rs. 05 lacsand Rs. 25lacs;

(ii) the Director or the other person towhom the loan/guarantee/Security is

given or provided, shall be punishable

with :

a) imprisonment with may extendto six months; or

b) fine Minimum Rs. 05 lacs andMaximum Rs. 25 lacs;

or both