Prohibition on loans to officers or shareholders

Prohibition on loans to officers or shareholders

(1) No company shall make any loan or provide any financial assistance to its officer, substantial shareholders or officer, the shareholder of a holding company or a close relative of such person nor shall it give any guarantee or provide security in respect of any loan borrowed by such officer or shareholder or close relative from any other person.

       Provided, however, that this provision shall not apply to any loan or facility to be made or provided to any employee of a company in accordance with the rules of the company or to any loan made or guarantee given by any bank or financial institution in the ordinary course of business transaction, except as prohibited by the prevailing law.

(2) Any person mentioned in Sub-section (1) shall repay any loan, which was borrowed by him/her prior to the commencement of this Act, no later than 22 Ashwin 2065 (8 December 2008).