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  • Borrowing Powers of A Company

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    Rashi Dubey
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    This document discusses borrowing powers of companies. It explains that companies need to borrow money to finance business activities, as financial requirements are met through issuing shares or public borrowings. Trading companies have implied powers to borrow for business purposes, while non-trading companies have no implied borrowing powers. Borrowings can be authorized or unauthorized, and ultra vires the company or directors but intra vires the company. Benefits of borrowing include cash flow, growth and flexibility. Lenders have rights against companies for recovery of damages. Companies can borrow through debentures, loans from financial institutions, or public deposits.

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    BORROWING POWERS OF A COMPANY

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    This document discusses borrowing powers of companies. It explains that companies need to borrow money to finance business activities, as financial requirements are met through issuing shares or public borrowings. Trading companies have implied powers to borrow for business purposes, while non-trading companies have no implied borrowing powers. Borrowings can be authorized or unauthorized, and ultra vires the company or directors but intra vires the company. Benefits of borrowing include cash flow, growth and flexibility. Lenders have rights against companies for recovery of damages. Companies can borrow through debentures, loans from financial institutions, or public deposits.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    12 views14 pages

    Borrowing Powers of A Company

    Uploaded by

    Rashi Dubey
    This document discusses borrowing powers of companies. It explains that companies need to borrow money to finance business activities, as financial requirements are met through issuing shares or public borrowings. Trading companies have implied powers to borrow for business purposes, while non-trading companies have no implied borrowing powers. Borrowings can be authorized or unauthorized, and ultra vires the company or directors but intra vires the company. Benefits of borrowing include cash flow, growth and flexibility. Lenders have rights against companies for recovery of damages. Companies can borrow through debentures, loans from financial institutions, or public deposits.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 14

    BORROWING

    POWERS OF A
    COMPANY
    BY:
    RASHI DUBEY
    MANSI VERMA
    PRIYANKA CHOUKSEY
    TISHYA DESHMUKH
    YAMINI GANGRADE
    INTRODUCTION
    We know that a company needs money to
    finance its business activities. Finance is the life
    blood of modern business.
    • The financial requirement of
    companies are met by two ways:

    By issue of By public
    shares Borrowings

    ADD A FOOTER 2
    EXTENT OF
    BORROWING
    POWERS
    For the purpose of borrowing, the
    companies my be divided into two
    categories, namely:

    NON-
    TRADING
    TRADING
    COMPANIES
    COMPANIES
    TRADING COMPANIES: Trading companies are
    those which carry on the trading business. Such
    companies have the implied powers to borrow
    money for the purpose of their business.
    NON-TRADING
    .
    COMPANIES: These companies are
    3
    those which do not deal in the trading
    business.Such companies have no implied powers
    to borrow money.
    BORROWINGS

    BORROWINGS

    AUTHORISED UNAUTHORISED
    BORROWINGS BORROWINGS

    BORROWINGS
    BORROWINGS ULTRA-VIRES THE 4
    ULTRA-VIRES THE DIRECTOR BUT
    COMPANY INTRA-VIRES THE
    COMPANY
    BENEFITS OF
    BORROWINGS

    CASH FLOW

    GROWTH

    FLEXIBILITY

    INTEREST RATES
    5
    MONEY –LENDER’S RIGHTS AGAINST THE COMPANY

    INJUNCTION SUBROGATION

    IDENTIFICATION RECOVERY OF
    AND TRACING DAMAGES
    6
    Borrowing ultra-vires the
    directors but intra -vires the
    company
    MEANING
    When the borrowings are made

    By the DIRECTORS

    Which is beyond their authority(ultra-vires)

    But within the power of company (intra-vires)


    RATIFICATION BY THE COMPANY

    Ratification Ratification not allowed


    allowed

    General principle of agency


    Company will be applied
    become
    liable to
    repay the Money borrowed for the
    loan benefit of the company.
    MISAPPROPRIATION OF MONEY
    TO UNAUTHORISED ACTIVITIES

    Without the Within the knowledge of the


    knowledge of the lender
    lender

    That the money That the money borrower is


    is misused not for company’s objective

    The company
    become liable to
    repay The loan becomes invalid
    METHODS OF BORROWINGS

    11
    A company may borrow money by one or
    more of the following methods:

    DEBENTURES:
    - A debenture is one of the most typical
    forms of long term loans that a
    company can take.
    - Fully secured

    12
    LOAN FROM FINANCIAL
    INSTITUTIONS:
    -A loan is a sum of money that one or more
    individuals or companies borrow from
    banks.
    -Fully secured

    PUBLIC DEPOSITS:
    -The term 'public deposit' implies any
    money received by a company through
    the deposits or loans collected from
    the public.
    - Unsecured Borrowings
    13
    THANK YOU!

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