Board’s powers ‑ Restrictions on ‑ When does clause (d) apply to temporary loans - Companies Law - Letter : No. 8/16(1)/61‑PR,

Letter : No. 8/16(1)/61 ‑ PR, dated 9 ‑ 5 ‑ 1961. Board s powers ‑ Restrictions on ‑ When does clause (d) apply to temporary loans Section 293(1)(d) does not prohibit the board from taking loans without any limit if these loans are temporary loans in the sense defined in Explanation II. As regards loans, other than temporary loans, if the board of directors desires to borrow moneys, it can do so only when the amount intended to be borrowed together with the moneys already borrowed does not exceed the aggregate to the paid‑up capital of the company and its free reserves or where the limit is exceeded, by obtaining the consent of the company in a general meeting. Thus, if the whole or part of the loan intended to be borrowed is raised for the purpose of financing expenditure of a capital nature the ceiling specified in section 293(1)(d) will apply. As the loan for financing expenditure of a capital nature is raised only occasionally, it is felt that it is not difficult to separate such loans from temporary loans.