Clarification by MCA For loans and advances to Employees. MCA Issued New Clarification with regard to section 185 and 186 of the Companies Act 2013 – loans and advances to employees – reg.. Read Full Clarification from Below. A loan on the other hand is providing a loan at a concessional interest rate as opposed to market rate of interest. The loan could be of larger amount and could be of various types such as house loans, vehicle loans or education loans. Thus the difference between the concessional rate of interest and market rate can provide a huge relief to employees seeking a loan.
This Ministry has received a number of references seeking clarification on the applicability of provisions of section 186 of the Companies Act, 2013 relating to grant of loans and advances by Companies to their employees
The issue has been examined and it is hereby clarified that loans and/or advances made by the companies to their employees, other than the managing or whole time directors (which is governed by section 185) are not governed by the requirements of section 186 of the Companies Act, 2013. This clarification will, however, be applicable if such loans/advances to employees are in accordance with the conditions of service applicable to employees and are also in accordance with the remuneration policy, in cases where such policy is required to be formulated.
This issues with the approval of the Secretary
