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.

Companies Act_Practical Problems_28

The Board of Directors of XYZ Ltd. has agreed in principle to grant loan worth Rs. 38 lakhs to MNC Ltd. on the basis of the following information.

Advise XYZ Ltd. about the requirements to be complied with under the Companies Act, 1956 for the proposed inter-corporate loan to MNC Ltd.
(i) Authorised share capital Rs. 1,00,00,000
(ii) Issued, subscribed and paid up capital Rs. 50,00,000
(iii) Free reserves Rs. 10,00,000