section 185 of companies act 2013

[sougata mitra]

If company A is itself a partner in partnership firm B, does restriction of section 185 of the Companies Act apply to corporate guarantee given by company A to secure the loan sanctioned to partnership firm B by the bank ?

[CA SOHRABH JINDAL]

NO,

But if in partnership B, any director manager or relative of director and manager of company A is a partner then 185 will be applicable

AI Summary

Corporate guarantee restriction under section 185 does not bar a company guaranteeing its partnership's loan unless connected persons are partners. A corporate guarantee by a company that is a partner in a firm is not automatically prohibited by the statutory restriction on loans and guarantees; the restriction applies if any partner in the firm is a director, manager, or relative of a director or manager of the company.