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 by Partner Company Not Restricted Under Section 185 Unless Directors Involved in the Partnership A query was raised regarding whether the restriction under Section 185 of the Companies Act, 2013, applies to a corporate guarantee given by Company A, which is a partner in Partnership Firm B, for a loan sanctioned to the firm by a bank. The response clarified that Section 185 does not apply unless a director, manager, or their relative from Company A is also a partner in Partnership Firm B.