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A public company proposes to borrow money that, with its existing borrowings, will exceed the aggregate of its paid-up share capital, free reserves and securities premium. Temporary loans from its…

Question and options

A public company proposes to borrow money that, with its existing borrowings, will exceed the aggregate of its paid-up share capital, free reserves and securities premium. Temporary loans from its bankers in the ordinary course of business are ignored. Under section 180(1)(c) of the Companies Act, 2013, what approval is required?

  1. An ordinary resolution in general meeting

  2. A special resolution in general meeting

  3. A resolution of the Board passed at a meeting

  4. A resolution of the Board passed by circulation

Answer and explanation

Correct answer: B - A special resolution in general meeting

Section 180(1)(c) of the Companies Act, 2013 lets the Board borrow beyond the aggregate of paid-up share capital, free reserves and securities premium only with the consent of the company by special resolution. A Board resolution at a meeting is enough for borrowing within that limit under section 179(3)(d), but not beyond it.

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