TOPIC 19: QUICK REFERENCE TO “Section 180 (1) (c) of Companies Act, 2013. w.r.t. Borrowing Powers”
.Quick Reference to Important Query in relation with "Section 180 (1) (c) of Companies Act, 2013. w.r.t. Borrowing Powers " :-.
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Query:-.
ABC ltd is a unlisted Public Company. The company wants to borrow ₹ 500 crore from the Financial Institution.
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The Financial Position of the Company is as follows;-
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Paid up share capital:- ₹ 100 Cr.
Profit & loss credit balance (Profit) :- ₹ 80 Cr.
General Reserve :- ₹ 100 Cr.
Asset revaluation reserve:- ₹ 40 Cr.
Debenture Redemption reserve:- ₹ 30 Cr.
Long Term Borrowing (Loan):- ₹ 50 Cr.
Short term Borrowing :- ₹ 15 Cr.
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Then, whether Company is required to pass Special resolution in general meeting???
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Answer:-.
1. As per section 180 (1) (c) of Companies Act, 2013, The Special resolution is required if the amount of Borrowing is more than Total paid up share capital + Free Reserve + Surplus (Profit) apart from Temporary & Short term loan in ordinary Course of business.
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2. In this Case/ Question The Company is required to pass Special resolution in general meeting.
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3. How/ Calculation :-
Paid up share capital:- ₹ 100 Cr
+ Surplus (Profit) :- ₹ 80 Cr.
+ Free Reserve :- ₹ 100 Cr.
Total= ₹ 280 Cr.
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( - ) Long term loan ₹ 50 Cr.
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Final Total / Amount upto which Company can borrow without passing Special resolution ( ₹ 280 Cr - ₹ 50 Cr ) = ₹ 230 Cr.
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4. Hence, It is conclude that Special resolution in general meeting is required because Company wants borrow ₹ 500 Cr ( Which is more than ₹ 230 Cr ).
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5. Debenture Redemption reserve, Asset revaluation reserve, Short term loan Should not be considered in our Caluation. It should be Excluded.
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Regards
ACA SOURAV BAGARIA
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