Company Law Nightmare: Section 186 vs Section 185
company clat_ug beginner pyq_discussionMaine socha hai, CLAT ke previous questions ka analysis karna padega. Ek question thi from 2020: "Which of the following is a restriction on the borrowing powers of a public company?" Aane ke tareeke:
(a) Section 185 (b) Section 186 (c) Section 149 (d) Section 127
Pehle, sabka understanding karein. Section 185 says companies can borrow on security, but only with the sanction of the board. Section 186 says, public companies, private companies with a share capital, can borrow from any person but with the sanction of the board. Section 149 related to management and Section 127 related to alteration in the share capital, koi relation nahi hai. 185 related to borrowing on security, 186 main restrictions hain.
Correct approach: Read the question carefully.
2 Comments
Main nahin samjhata ki ye debate aise hi ho raha hai, Section 185 mein capital expenditure karna mushkil hai lekin Section 186 main company ke liye loan lena bahut aasan hai. Lekin yeh sabhi kuch public company ke liye nahi, private company ke liye bhi applicable hai. Ismein koi farq nahin hai. Aapke vichar ke anusaar sirf public company ke liye Section 185 hain, bas naye share jari karne ke liye.
Yar, don't know what's happening, Section 185 and 186 of the Companies Act is one of the most confusing topics in our syllabus. But in short, Section 186 is for loans and guarantee, while Section 185 is for investments and securities. Don't get them mixed up, else you'll end up writing a whole essay on why your friend company is defaulting on its loans! Read the notes from page 23, sab samjh aaya hoga.