Pvt Cos should be free to take unsecured loans without limit, say MP industries
Updated: Jul 04, 2014 03:51:30pm
Bhopal, Jul 4 (KNN) Under the New Companies Act 2014, the Madhya Pradesh industries want private companies to have the liberty to take unsecured loans from their members without any limit.
“Private company should be free to take unsecured loan from its members without any limit instead of present limit of 25 per cent of paid up capital plus free reserve,” Federation of Madhya Pradesh Chambers of Commerce and Industry (FMPCCI) has suggested.
FMPCCI in its newsletter said that they have received problems and suggestions on the new Companies Act 2014 with amendments recommended by its members, which they have forwarded to the concerned department.
“If Debentures secured are issued with proper security with any charge, it should be in exempted category of deposit, instead of secured debentures with first ‘pari passu’ charge,” it said.
Pari passu is a Latin phrase that literally means "with an equal step" or "on equal footing.
FMPCCI further noted that the relief provided for applicability of section 185 of the Companies Act will not address the problem.
The industry body suggested that the exception provided for private limited companies under section 185 need to be re-worded.
It should be, “Shall not apply to Private companies -(a) which have borrowings from banks or financial institutions or any bodies corporate are not more than twice the sum of paid up capital and free reserves or Rs 100 crore, whichever is lower; and (b) in whose share capital no other body corporate has more than 1 per cent shareholding,” they proposed. (KNN/SD)
“Private company should be free to take unsecured loan from its members without any limit instead of present limit of 25 per cent of paid up capital plus free reserve,” Federation of Madhya Pradesh Chambers of Commerce and Industry (FMPCCI) has suggested.
FMPCCI in its newsletter said that they have received problems and suggestions on the new Companies Act 2014 with amendments recommended by its members, which they have forwarded to the concerned department.
“If Debentures secured are issued with proper security with any charge, it should be in exempted category of deposit, instead of secured debentures with first ‘pari passu’ charge,” it said.
Pari passu is a Latin phrase that literally means "with an equal step" or "on equal footing.
FMPCCI further noted that the relief provided for applicability of section 185 of the Companies Act will not address the problem.
The industry body suggested that the exception provided for private limited companies under section 185 need to be re-worded.
It should be, “Shall not apply to Private companies -(a) which have borrowings from banks or financial institutions or any bodies corporate are not more than twice the sum of paid up capital and free reserves or Rs 100 crore, whichever is lower; and (b) in whose share capital no other body corporate has more than 1 per cent shareholding,” they proposed. (KNN/SD)
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