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The Ministry of Corporate Affairs ("MCA") has notified the Companies (Meetings of Board and its Powers) Amendment Rules, 2025 vide notification no. G.S.R. 811(E) dated 03.11.2025 ("Companies Amendment Rules"). The Companies Amendment Rules substitute Rule 11(2) of the Companies (Meetings of Board and its Powers) Rules, 2014, which deal with loan and investment by a company under Section 186 of the Companies Act, 2013 ("Act").
The key change relates to the scope of the expression "business of financing industrial enterprises" as used in Section 186(11)(a) of the Act, which determines when certain entities are exempt from the limits and approval requirements prescribed under Section 186.
Earlier, with regard to an NBFC registered with RBI, it meant "business of giving of any loan to a person or providing any guaranty or security for due repayment of any loan availed by any person in the ordinary course of its business."
The Companies Amendment Rules substitute the earlier provision and expand the scope of "business of financing industrial enterprises" as follows:
- For NBFCs registered with RBI, the expression "business of financing industrial enterprises" includes the business of giving of any loan to a person or providing any guaranty or security for due repayment of any loan availed by any person in the ordinary course of its business; and
- For Finance Companies registered with International Financial Services Centres Authority ("IFSCA"), the expression will include the activities as provided in Regulation 5(1)(ii)(a) or Regulation 5(1)(ii)(e) of the IFSCA (Finance Company) Regulations, 2021 in the ordinary course of its business. Regulation 5 of IFSCA (Finance Company) Regulations, 2021 relate to "Permissible activities". Regulation 5(1)(ii)(a) deals with lending in the form of loans, commitments and guarantees, credit enhancement, securitisation, financial lease, and sale and purchase of portfolios. Regulation 5(1)(ii)(e) deals with Global/Regional Corporate Treasury Centres.
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