Friday, August 01, 2008

Companies Act_Practical Problems_29

From the following information extracted from the balance sheet of VCD Ltd. as at 31st March, 2006, Board of directors of the company decide to grant a loan of Rs. 80 crores to another company JN Ltd.

Paid-up Share Capital:
Equity Share Capital Rs. 50 crores
Preference Share Capital Rs. 10 crores
General Reserves Rs. 100 crores
Debentures Rs. 5 crores
Debenture Redemption Reserve Rs. 5 crores

The company has already given loans to the following companies:
(i) Peters Ltd. Rs. 5 crores
(ii) Steel India Ltd Rs. 10 crores

The company has also given a corporate guarantee of Rs. 10 crores to NR & Co. Ltd. Advise whether the Board can go ahead with the above proposal.

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