There is some confusion with regard to applicability of Section 185 of the Companies Act, 2013 with prevailing section 372A of the Companies Act, 1956 in professionals. MCA has issued a circular dated 19/11/2013 to clarify its stand on Section 372A which says:
"This Ministry has received number of representations consequent upon notifying Section 185 of the Companies Act, 2013 dealing with loans to directors which is corresponding to Section 295 of the Companies Act, 1956. Section 186 of the Companies Act, 2013 is yet to be notified.
It is clarified that Section 372A of the Companies Act, 1956 dealing with inter-corporate loans continue to remain in force till section 186. of the Companies Act, 2013 is notified. "
Nothing in the above circular suggest that Section 185 is not applicable till Section 186 notified. Section 185 is completely applicable since its notification on 12.09.2013 and is separate from Section 372A.
"This Ministry has received number of representations consequent upon notifying Section 185 of the Companies Act, 2013 dealing with loans to directors which is corresponding to Section 295 of the Companies Act, 1956. Section 186 of the Companies Act, 2013 is yet to be notified.
It is clarified that Section 372A of the Companies Act, 1956 dealing with inter-corporate loans continue to remain in force till section 186. of the Companies Act, 2013 is notified. "
Nothing in the above circular suggest that Section 185 is not applicable till Section 186 notified. Section 185 is completely applicable since its notification on 12.09.2013 and is separate from Section 372A.
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