VARIOUS TYPES OF BORROWERS

1. AGENTS & ATTORNEYS :A PERSON CAN AUTHORISE ANOTHER PERSON

TO DO AND CARRY ON WHATEVER ACTS HE HIMSELF CAN DO.

2. THE POWER OF ATTORNEY IS A DOCUMENT WHICH CONFERS SUCH POWERS ON THE DONEE

3. IT IS PROPERLY STAMPED, WITNESSED AND EXECUTED IN THE PRESENCE OF A MAGISTRATE

OR NOTARY PUBLIC

THE POWER OF ATTORNEY IS ENTERED IN THE POWER OF ATTORNEY REGISTER. THE AGENT OR

THE DONEE MUST SIGN THE CHEQUES FOR AND ON BEHALF OF THE PRINCIPAL SO THAT OTHERS MAY KNOW HE IS DEALING ONLY IN REPRESENTATIVE

CAPACITY

Visit http://targetibpsexam.blogspot.in/

For JAIIB/ CAIIB Exam Study Material

WHEN A POWER OF ATTORNEY IS GIVEN IN FAVOUR OF AN AGENT, THE AGENT HAS AN

INTEREST IN IT AND SUCH POWER OF ATTORNEY IS KNOWN AS AGENCY

COUPLED WITH INTEREST.

ASSOCIATIONS, CLUBS AND SOCIETIES

1. ONLY INCORPORATED SOCIETIES CAN BE SUED.2.OBJECTIVE OF SOCIETIES MUST BE ASCERTAINED3.RESOLUTION OF MANAGING COMMITTEE ABOUT OPERATION OF BANK ACCOUNT AND BORROWING

ARRANGEMENTS MUST BE OBTAINED4. PERSONAL GUARANTEE OF ALL MEMBERS OF

MANAGING COMMITTEE MUST BE OBTAINED5. THE CURRENT BYE LAWS MUST BE OBTAINED6.CERTIFIED COPY OF RESOLUTION IS OBTAINED

7.IN REGARD TO SUPER MARKETS, PERMISSION OF THE REGISTRAR OF CO-OPERATIVE SOCIETIES IS

OBTAINED

BANKS1.ANY CREDIT ARRANGEMENTS OF WHATEVER NATURE HAVE TO BE ARRANGED BY THE HEAD OFFICE OF A BANK. T.T. PURCHASE FACILITY IS

SANCTIONED AGAINST GOVT. SECURITY.2.NO ACCOUNT CAN BE OPENED FOR A BANK AT A

BRANCH IF THE BANK DOES NOT HAVE BRANCH AT THAT CENTRE WITHOUT PRIOR PERMISSION FROM

CONTROLLING AUTHORITY.3. THE ACCOUNT IS OPENED ONLY TO SETTLE CLEARING TRANSACTIONS OR SETTLE THEIR

COLLECTION TRANSACTIONS WHERE NO CLEARING SYSTEEM IS IN OPERATION.

COMPANIES

• PUBLIC SECTOR COMPANIES ARE GOVERNMENT COMPANIES IN WHICH NOT LESS THAN 51% OF THE PAID UP CAPITAL IS HELD BY GOVT.

• JOINT SECTOR COMPANY – 25% OF SHAREHOLDING IS HELD BY GOVERNMENT

OPENING OF ACCOUNT OF COMPANIES1. MEMORANDUM OF ASSOCIATION :- IT THE

BASIC CHARTER OF THE COMPANY. IT DEFINES THE OBJECT OF ITS EXISTENCE AND OPERATIONS. IT

CAN DO BUSINESS ONLY AUTHORISED IN THE MEMORANDUM OF ASSOCIATION.

2.ANY ACTIVITY OF THE COMPANY BEYOND MEMORANDUM OF ASSOCIATION IS ULTRA VIRUS

ACTIVITY AND FOR LOAN GIVEN FOR SUCH ACTIVITIES, COMPANY CANNOT BE SUED.

3. BORROWING POWER OF COMPANY IS MENTIONED IN THE MEMORANDUM OF

ASSOCIATION

ARTICLE OF ASSOCIATION

• IT CONTAINS RULES AND REGULATIONS REGARDING THE OPERATION OF THE COMPANIES

• IT DEALS WITH THE RIGHTS AND POWERS OF DIRECTORS, PROCEEDINGS OF THE MEETINGS, DELEGATION OF POWERS.

• IT DEALS WITH BORROWING POWER OF DIRECTORS

• NOTE : IF THE DIRECTOR EXCEEDS THE POWER, IT CAN BE RECTIFIED BY THE SHAREHOLDER

CERTIFICATE TO COMMENCE BUSINESS

• IT IS REQUIRED IN CASE OF PUBLIC LIMITED COMPANY.

• IT IS ISSUED BY REGISTRAR OF COMPANIES IF MINIMUM 90% OF SUBSCRIPTION REQUIRED BY THE COMPANY IS SUBSCRIBED BY THE PUBLIC

• THERE IS NO PROVISION UNDER COMPANY ACT FOR PVT LTD COMPANIES TO GET CERTIFICATE TO COMMENCE BUSINESS

OMNIBUS RESOLUTION & BORROWING POWER

• OMNIBUS RESOLUTION : IF A RESOLUTION IS PASSED TO OPEN ACCOUNTS IN THE NAME OF THE COMPANY WITH ANY BANK AT ANY PLACE

• POWER TO BORROW SHOULD BE CLEARLY EXPRESSED IN MEMORANDUM.

• IT SHOULD CLEARLY EXPRESSED THAT COMPANY HAS POWER TO CHANGE ITS ASSETS BY WAY OF SECURITY TO A CREDITOR.

OPERATION OF ACCOUNT

• BORROWING POWERS OF A PUBLIC LIMITED COMPANY IS GOVERNED BY SECTION 292 AND SEC 293 OF INDIAN COMPANIES ACT:

• SECTION 292 : THE POWER TO BORROW IS VESTEDWITH THE BOARD OF DIRECTORS. THEY SHOULD EXERCISE THIS POWER BY MEANS OF RESOLUTIONS PASSED AT THE MEETING OF THE BOARD.

• THE POWER TO BORROW CAN BE DELEGATED TO ANY DIRECTOR/OFFICER OF THE COMPANY AND IT SHOULD SPECIFY THE TOTAL AMOUNT UPTO WHICH LOANS MAY BE RAISED AND PURPOSE OF LOAN IS ALSO MENTIONED.

• IT ALSO APPLIES TO ISSUE OF DEBENTURE AND INVESTMENT OF FUNDS.

SECTION 293 OF INDIAN COMPANIES ACT

• IF THE BORROWING OF A PUBLIC LIMITED COMPANY EXCEEDS ITS PAID UP CAPITAL AND FREE RESERVES IT SHOULD BE AUTHORISED BY GENERAL BODY MEETING OF SHAREHOLDERS.

ULTRA VIRUS BORROWINGS – ITS RATIFICATION

• IF THE BOARD OF DIRECTORS EXCEED THEIR POWER, SHAREHOLDERS MAY RATIFY IT IN WHICH CASE BORROWING WILL BE BINDING ON THE COMPANY.

• IF THE BORROWING IS ULTRA VIRUS THE ARTICLE, THE ARTICLES MAY BE AMENDED AND BORROWING OR ACT OF THE COMPANY BECOME VALID

REGISTRATION OF CHARGE

• UNDER SECTION 125 OF THE COMPANIES ACT CERTAIN CHARGES ARE CREATED BY THE COMPANY IN FAVOUR OF BANK AS SECURITY FOR THE ADVANCES WITH THE REGISTRAR OF COMPANIES:

• MORTGAGE OF PROPERTY – REGD AND BY DEPOSIT OF TITLE OF GOODS

• HYPOTHECATION OVER THE ASSETS OF THE COMPANY SUCH AS STOCKS, BOOK-DEBTS ETC

• LOATING CHARGE OF THE COMPANY’S ASSETS

• A CHARGE ON THE UNCALLED CAPITAL

Visit http://targetibpsexam.blogspot.in/

For JAIIB/ CAIIB Exam Study Material

REGISTRATION OF CHARGE - CONTD

• THE CHARGE HAS TO BE FILED WITH THE ROC IN THE STATE WHERE COMPANIE’S REGISTERED OFFICE IS LOCATED.

• FORM 8 IS PREPARED AND SIGNED BOTH BY COMPANY AND THE BANK IN THREE COPIES AND REGISTRAR WILL BRAND ALL THE THREE COPIES WITH SIGNATURE AND DATE.

• FIRST COPY – ROC, SECOND COPY – BANK AND THIRD COPY – COMPANY

• VERIFIED COPY OF DOCUMENTS IS ALSO FILED WITH THE ROC WITH FORM 8

REGISTRATION OF CHARGE

• IF THE CHARGE IS NOT REGISTERED ON FORM 13 WITHIN 30 DAYS FROM THE DATE OF CREATION, THE CHARGE WILL BE VOID AGAINST THE LIQUIDATOR OF THE COMPANY AND ANY CREDITOR OF THE COMPANY.

• BANK ADVANCE WILL BECOME UNSECURED AND BANK WILL RANK AS AN UNSECURED CREDITOR IN CASE OF LIQUIDATION OF THE COMPANY.

• AFTER SANCTION OF ADVANCE, FIRST SEARCH IS DONE TO ENSURE THAT THERE IS NO PRIOR CHARGE (BEFORE EXECUTION OF DOCUMENTS)

• BANK’S CHARGES HAS TO BE REGISTERED WITHIN 30 DAYS FROM THE DATE OF CREATION OF CHARGE

REGISTRATION OF CHARGE - CONTD

• SECOND SEARCH IN THE REGISTRAR’S OFFICE IS DONE AFTER DOCUMENTS ARE EXECUTED AND INITIAL DISBURSEMENT OF THE LOAN IS MADE

• IT IS DONE TO ENSURE THAT NO CHARGE HAS BEEN CREATED BETWEEN TWO SEARCHES

REGISTRATION OF CHARGE - CONTD

• DELAY IN REGISTRATION OF CHARGE

• COMPANY LAW BOARD

• MODIFICATION OF CHARGE

• FLOATING CHARGE

• FIXED CHARGE

JOINT ACCOUNT – OVERDRAFT

• COS 57 IS OBTAINED

• TO MAKE THEM JOINTLY AND SEVERALLY LIABLE

JOINT HINDU FAMILY

• KARTA OF THE FAMILY – ANCESTRAL BUSINESS

• ALL ADULT CO-PARCENERS• GUARDIAN FOR AND ON BEHALF OF

MINOR’S INTERST IN JHF

LIQUIDATOR AND RECEIVERS

• LIQUIDATOR (COMPANY), RECEIVER (INDIVIDUAL AND FIRM) ARE APPOINTED BY THE COURT. NO ADVANCE IS GRANTED TO THEM.

•

PARTNERSHIP FIRM

• THOUGH ONE PARTNER CAN BIND THE PARTNERSHIP BY HIS ACTS, AS A MATTER OF PRACTICE, SECURITY DOCUMENTS ARE REQUIRED TO BE SIGNED BY ALL THE PARTENERS

• Section 19(2)(g) OF THE PARTNERSHIP ACT PROHIBITS A PARTNER FROM CREATING A MORTGAGE OVER THE IMMOVABLE PROPERTY OF THE FIRM, ALL PARTNERS SHOULD SIGN THE DOCUMENTS.

TRUST

• IF TRUST DEED IS SILENT ABOUT BORROWING, NO ADVANCE IS SANCTIONED

• ADVANCE CAN BE GRANTED TO A TRUST AGAINST THE PERSONAL GUARANTEE OF TRUSTEES, SUITABLE CHARGE OVER TRUST ASSET IS CREATED

• NO TRUSTEE CAN DELEGATE HIS POWER TO ANOTHER TRUSTEE OR THIRD PERSON

Visit http://targetibpsexam.blogspot.in/

For JAIIB/ CAIIB Exam Study Material