Speciality Nuts and Bolts Limited, a profit-making listed company has given the following information for the FY ending 31st March, 2024 : Item Amount (₹ in crores) Paid-up Equity share capital 24 Preference share capita

According to section 186(2)(a) and (3) of the Companies Act, 2013 read with Rule 13 of the Companies (Meeting of Board and its Powers) Rules, 2014, no company shall directly or indirectly, give any loan to any person or other body corporate exceeding 60% of its (paid-up share capital + free reserves + security premium account) or 100% of its (free reserves+ security premium account) whichever is more, without the approval of the members by passing a special resolution. In this case, 60% of net worth of the company is (0.6 * (24+8+80+48) = 96 crore) = Rupees 96 crore. The total of free reserve and security premium is (80+48) = Rupees 128 crore. Hence, the company can, theoretically, give loan upto the higher of the two amounts which is Rupees. 128 crore. As the Board of Directors are considering granting of only Rupees. 50 crore to Lamps and Shades Limited, the loan is, prima facie, within the prescribed limits of the Board itself. No special resolution by members is necessary in this case. However, Section 186(5) states that no investment shall be made or loan or guarantee or security by the company unless the resolution sanctioning the loan is passed at the meeting of the Board with the consent of all the directors present at the meeting. In this case, as the board resolution has not been passed unanimously, the resolution is not valid. The company cannot grant the loan to Lamps and Shades Limited even if members' approval by special resolution is obtained as required u/s 186(3) as the unanimous board approval was not obtained in the first place.