Loan, guarantee or security restrictions on directors: breaches attract criminal and monetary penalties under company law, including prohibition enforcement. Companies are prohibited from advancing any loan, guarantee or security to a director or to persons in whom a director is interested, subject to exceptions for managing or whole-time directors under conditions of service or member approved schemes and for lending by companies in the ordinary course of their business with interest charged at or above bank rates. The statute defines interested persons to include relatives, partners, related firms and controlled or directed corporate entities. Breach of the prohibition renders the company and recipient liable to penal consequences, including fines and imprisonment.
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.
Loan, guarantee or security restrictions on directors: breaches attract criminal and monetary penalties under company law, including prohibition enforcement.
Companies are prohibited from advancing any loan, guarantee or security to a director or to persons in whom a director is interested, subject to exceptions for managing or whole-time directors under conditions of service or member approved schemes and for lending by companies in the ordinary course of their business with interest charged at or above bank rates. The statute defines interested persons to include relatives, partners, related firms and controlled or directed corporate entities. Breach of the prohibition renders the company and recipient liable to penal consequences, including fines and imprisonment.
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