SECTION 293 (1) (d)

BORROWING IN EXCESS OF PAID-UP CAPITAL AND FREE RESERVES

1. Subject - Borrowing in excess of paid-up cappital and free reserves.

2. Passing Authority - General Meeting.

3. Nature of the Resolution - Ordinary Resolution.

4. Specimen Resolution(s):

"That the Board of Directors be and is hereby authorised and shall be deemed to have always been so authorised to raise or borrow from time to time at its discretion either from the company's bankers or form the Directors or from elsewhere on such terms and conditions as to repayment, interest or otherwise as it thinks fit such sums as may be necessary for the purposes of the Company up to a limit of Rupees three crores outstanding at any one time and that such borrowing shall be exclusive of temporary loans obtained or to be obtained by the Company from the company's bankers in the ordinary course of business."

5. Guidelines:

1) Approval of the Company in general meeting is for borrowing moneys where the moneys to be borrowed together with moneys alreadyborrowed exceed the aggregate of the paid-up capital and free reserves.

2) Temporakry loans obtained from the Company's bankers in the ordinary course of business are excluded in computing thelimits. The expression "Temporary loans" means loans repayable on demand or within 6 months from the date of the loan such as short term, cash credit arrangements, the discounting of bills and the issue of other short term loans of a seasonal character but does not include loans raised for the purpose of financing expenditure of a capital nature.

3) "Free reserves" mean reserves not set apart for any specific purpose.

4) For borrowing within the limits mentioned in para 1 above or within the limits fixed by the General Meeting, a board resolution is sufficient.

5) Instead of providing for a fixed limit, the resolution may provide for varying limit e.g. twice the aggregate of the paid up capital and free reserves of the company for the time being. Explanation I to sub-section (1) only requires that the limit should be specified and no quantified.

6) The words "and shall be deemed to have always been so authorised" have been inserted in the specimen resolution above to provide for ratification of existing irregular borrowing, if any.

7) Raising of Capital byissue of shares is not borrowing of monies within the meaning of section.

8) The section is not applicable to a private company which is not a subsidiary of a public company.

9) A Trading Company has always an implied power to borrow and therefore specific provision in memorandum will not be necessary.

6. Filing: form 23--within 30 days.