MCA Updates: Clarification u/s 372A(3) of the Companies Act, 1956...prohibits lending of money to Bodies Corporate at a rate lower than the prevailing bank rate.
The Ministry
of Corporate Affairs vide its General Circular No. 06/2013 dated 14.03.2013, has
issued a clarification with respect to Section 372A (3) of the Companies Act,
1956 that prohibits lending of money to Bodies Corporate at a rate lower than
the prevailing bank rate.
The Union Budget 2013-14 allows the Central
Government to raise Rs. 50,000 Crores in the form of Tax Free Bonds which carry
a lower rate of interest (presently 6.75% to 7.5%) which is tax free under
Sections 10(15) (iv)(h) of the Income Tax, 1961. Such a provision was also made
in Budget 2012-13 but it received poor acceptance owing to restrictions posed by
Section 372A (3) of the Companies Act, 1956. The Ministry of Finance therefore
drew the attention of MCA to the said section in order to remove bottlenecks in
effective implementation of this provision.
It is noteworthy that the Companies Bill
2012 has already taken care of the issue as the provision therein with
reference to Loan and investment by company mentions:-
186 (7) No loan shall be given under this
section at a rate of interest lower than the prevailing yield of one year, three
year, five year or ten year Government Security closest to the tenor of the
loan.
Comments
Post a Comment