Section 186 of the Companies Act, 2013 – Some food for thought

Section 186 of the Companies Act, 2013 (hereinafter referred to as “the Act”) corresponds conceptually to Section 372A of the predecessor Act i.e. Companies Act, 1956. In reality, it
raverses a path which is much wider than its predecessor and its tentacles extend much wider than perhaps was intended by the legislature. Further, it is replete with drafting anomalies which still need to be addressed. It is also much more rigid and inflexible, making it an arduous obligation for corporates to fulfil as opposed to its avowed intention to regulate investments and lending by companies essentially to corporates.

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