Section 186 of the Companies Act 2013: A Guide by RegisterKaro

Section 186 of the Companies Act, 2013, outlines the regulations governing loans, investments, guarantees, and securities provided by companies. This section aims to ensure that companies manage their financial resources prudently and avoid excessive lending or investing in a manner that could expose them to financial risk. Section 186 also specifies limits on these transactions, approval requirements, and compliance with disclosure norms to protect shareholders’ interests and maintain transparency.

Key provisions under Section 186 include a maximum limit for loans and investments (up to 60% of the company’s paid-up share capital, free reserves, and securities premium, or 100% of its free reserves and securities premium, whichever is higher). For amounts exceeding this limit, companies must obtain prior approval from shareholders through a special resolution. This section also mandates disclosure of such transactions in the company’s financial statements, ensuring transparency.

RegisterKaro’s blog on Section 186 of the Companies Act 2013 provides an in-depth look at these requirements and the implications for companies, helping business owners and stakeholders navigate the complexities of this regulation. With a clear understanding of Section 186, companies can make informed financial decisions while staying compliant with the law.

Read Full Blog Post- https://www.registerkaro.in/post/section-186-of-the-companies-act-2013

For more information, visit us on: https://www.registerkaro.in/