Inter-Corporate Loans Software for Company Secretaries: Section 186 Compliance

Section 186 of the Companies Act, 2013 governs loans, guarantees, and securities provided by companies to other body corporates. Board approval is mandatory; exceeding prescribed limits requires special resolution. Inter-corporate loans software helps Company Secretaries draft compliant board resolutions, EGM notices, and explanatory statements.

Companies Act 2013 Provisions – Section 186

Section 186 applies to loans, guarantees, and investments. Limits: 60% of paid-up share capital + free reserves + securities premium, OR 100% of free reserves + securities premium (whichever is higher). Exceeding limits requires special resolution. Unanimous board approval may be required in specified cases. Prior approval of term-loan lenders may be needed. Exemptions exist for wholly-owned subsidiaries, JVs, and financial institutions.

• Board resolution (unanimous where specified)
• Special resolution at EGM (if limits exceeded)
• Explanatory statement with loan/guarantee details

Documents Required for Inter-Corporate Loans

• Board meeting notice and resolution
• EGM notice and special resolution (if limits exceeded)
• Explanatory statement (Section 102)

Manual vs Automated ICL Document Drafting

Inter-corporate loan documents require correct limit calculations and explanatory statement wording. Manual drafting risks calculation errors or incorrect limit disclosure.

• Manual: 2–3 hours; limit calculation done manually
• Automated: 15–30 minutes; limit disclosure pre-structured
• Manual: Lender/borrower details repeated across documents
• Automated: Single entry, auto-filled

Software Automation Process for Inter-Corporate Loans

1. Select company – Company (lender or borrower) loads from database.
2. Enter counterparty details – Other company name, CIN, relationship (lender/borrower).
3. Enter loan details – Amount, purpose, tenure, interest (if any).
4. Check limits – Software helps structure limit disclosure; user confirms if special resolution is needed.
5. Enter meeting details – Board meeting date/time/venue; EGM if special resolution required.
6. Generate documents – Board notice, board resolution, EGM notice, special resolution, explanatory statement.

How Inter-Corporate Loans Software Automates Drafting

Inter-corporate loan modules generate board notices, resolutions with correct limit disclosures, EGM notices, and explanatory statements. Lender and borrower details are auto-filled. Use with board meeting software and AGM/EGM software. See the full event-based compliance guide.