Loans to directors restricted; companies must not make prohibited related-party loans or guarantees without prior approval. Section 295 prohibits companies from making loans to, or giving guarantees or securities for loans to, prescribed related persons and entities connected to directors unless excepted; specified exceptions cover private companies, banking companies and certain holding-subsidiary transactions. Companies with pre-existing disallowed transactions must obtain retrospective approval or enforce repayment within a limited period. Persons knowingly party to contraventions face penal consequences and joint and several liability to the lending company for repayment, subject to mitigation where loans are repaid; officers are not liable unless they had knowledge or express notice of the contravention.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Loans to directors restricted; companies must not make prohibited related-party loans or guarantees without prior approval.
Section 295 prohibits companies from making loans to, or giving guarantees or securities for loans to, prescribed related persons and entities connected to directors unless excepted; specified exceptions cover private companies, banking companies and certain holding-subsidiary transactions. Companies with pre-existing disallowed transactions must obtain retrospective approval or enforce repayment within a limited period. Persons knowingly party to contraventions face penal consequences and joint and several liability to the lending company for repayment, subject to mitigation where loans are repaid; officers are not liable unless they had knowledge or express notice of the contravention.
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