Quick Answer: What Is The Whitewash Procedure?

Under the erstwhile provisions of Section 185 of the 2013 Act, a company is prohibited to provide a loan, guarantee or security to any of its directors or to any other person in whom the director is interested’.

that the loans are utilized by the borrowing company for its principal business activities..

What is a Rule 9 Whitewash?

The ‘whitewash’ procedure under Appendix 1 is available where, as a result of the issue of new securities as consideration for an acquisition or a cash injection or in fulfilment of obligations under an agreement to underwrite the issue of new securities, a person or group of persons acting in concert acquires an …

What constitutes financial assistance?

What constitutes financial assistance? Section 45 does not define financial assistance; instead it refers to financial assistance including the lending of money, guaranteeing of a loan and securing of any debt or obligation.

Can a company hold shares in itself as trustee?

In particular, the Act expressly prohibits companies from owning shares in themselves. … As the legal owner of those shares is the trustee, this results in the trustee owning shares in itself.

Can a company hold shares in itself?

Treasury shares are shares that a company holds in itself which have been bought back from a shareholder. … Private companies and unlisted companies can now hold their shares in treasury. Prior to then, only public listed public companies could buyback their shares and hold them as treasury shares.

Can a subsidiary buy shares in its parent company?

No, a subsidiary company cannot own shares in a parent company as per the Companies Act, 2013. According to the Companies Act, 2013 a subsidiary company by itself or through its nominee cannot hold shares in a holding company. … Also, a subsidiary company can hold shares of a holding company as a trustee.

Can a company finance the purchase of its shares?

The Prohibition on a Company Financing the Purchase of its own Shares. … The rule is provided for in section 82 of the Companies Act 2014 and prohibits a company from directly or indirectly giving any financial assistance for the purpose of acquiring any shares in the company.

What is the purpose of financial assistance?

Definition and example. Financial assistance is any type of monetary help or aid that a person, organization, or government receives. The financial assistance may be in the form of guarantees, loans, cost-sharing arrangements, subsidies, or welfare payments.

Can companies give third party loans?

A public company is required to follow the provisions of Section 295 while giving loan to Director or his relatives. However, it can give loan to third party. Views of other members are solicited.

Can a company give interest free loan to its employees?

Similarly, an interest-free or concessional loan provided by an employer is taxable as a ‘perquisite’ for an employee. Therefore, the employer should deduct tax at source (TDS) on the interest chargeable on the loan, as part of the employees’ salary.

Can company give another company loan?

4) Section 186: – No company shall directly or indirectly give any loan to any other person or body corporate exceeding 60% of its paid up share capital, free reserves and share premium or 100% of its free reserves and securities premium whichever is more.