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of <h1>Company loans, guarantees or security for directors and related parties u/s 185: barred deals, limited approvals, penalties.</h1> Prohibits a company from directly or indirectly advancing any loan (including book-debt loans), or giving any guarantee or providing any security, in connection with a loan to any director (including of its holding company) and such director's partner or relative, or to any firm in which such director or relative is a partner; such transactions are barred. Permits loans/guarantees/securities to persons in whom a director is interested only if approved by special resolution with prescribed disclosures and the borrowing company uses the funds for its principal business activities; non-compliant transactions are impermissible. Exempts specified cases, including certain loans to managing/whole-time directors, lending in the ordinary course at a minimum government-security-linked yield, and specified holding-subsidiary arrangements subject to principal business use. Contraventions attract fines and potential imprisonment for the company, defaulting officers, and recipients.
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