Applicable of Section 185 for intercorporate deposit

[Bhairob Chandra Bor]

Dear Sir,

we need your kind advice from the following facts:

1. we have an intercompany deposit of Rs.5 cr

2. both the company is a Limited company (not a Pvt.Ltd Co.)

3. one director is common for both the companies

is the Section 185-loan to director etc. applicable in our case? If applicable what will be procedures to stay safe from the statutory point view?

Kind Regards,

BCB

AI Summary

Debate on Section 185's applicability to a Rs. 5 crore intercorporate deposit between companies with a common director. A discussion on the applicability of Section 185 concerning an intercorporate deposit of Rs. 5 crore between two limited companies with a common director. One participant argues that Section 185 does not automatically apply to intercorporate deposits unless specific conditions are met, such as the borrower being a holding or private company with a common director or if the lender has significant control. Another participant insists that Section 185 is applicable, advising further review of the explanation. The discussion highlights the need to assess whether any specific conditions triggering Section 185 are present in this case.