MCA Clarification on applicability of Section 185 of Companies Act 2013 and Section 372A of the Companies Act, 1956

21 Nov 2013


MCA has issued a clarification that Section 372A of the Companies Act 1956 (which deals with inter-corporate loans) will continue to remain in force till such time Section 186 of the new Companies Act 2013 is notified. This will mean that a Company may give loans to its wholly owned subsidiaries even where directorships are common.


The text of the Notification is as follows :-


General Circular 18/2013,

Dated: 19/11/2013

No. 17/202/2013-CL-V

Sub: – Clarification with regard to applicability of provision of Section 372A of the Companies Act, 1956.




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 loanscontinue to remain in force till section 186. of the Companies Act, 2013 is notified.


This issues with the approval of competent authority


Yours Faithfully,

(Kamna Sharma)

Assistant Director


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