The Ministry of Corporate Affairs vide notification dated 11th October 2019, has published the Companies (Meetings of Board and its Powers) Amendment Rules, 2019 to further amendment the Companies (Meetings of Board and its Powers) Amendment Rules, 2014.
The amendment is brought in Rule 11(2), which defines the term “Business of financing” in the context of loan and investments by a company under section 186 of the Companies Act, 2013 to bring it in line with the provisions of sub-section 11 of 186.
Sub-section (11) of section 186 carves out exemptions from the operations of section 186 except for compliances relating to making investment through multiple layer of companies.
Amongst others, this exemption is available to any loan made, any guarantee given or any security provided or any investment made by a banking company, or an insurance company, or a housing finance company in the ordinary course of its business, or a company established with the object of and engaged in the business of financing industrial enterprises, or of providing infrastructural facilities.
Further, Rule 11 of the Companies (Meetings of Board and its Powers) Rules, 2014 seeks to defined the term the “Business of Financing Industrial Enterprises”. The term of this definition has been amended from the “business of financing of companies” to “Business of Financing Industrial Enterprises” to bring it in line with the sub-section 11 of section 186. Apart from the above, there has been no change in the definition.
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