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Companies Act, 1973 (Act No. 61 of 1973)

Chapter XI: Accounting and Disclosure

Disclosure of Certain Matters in Financial Statements

295. Annual financial statements to disclose loans to and security for benefit of directors and managers

 

 

1) The annual financial statements of a company shall state-
a) the amount and particulars of every loan referred to in section 226(1) which has during the financial year concerned been made by virtue of the provisions of section 226 (2) (a), (b) or (e), including every such loan which has during the said financial year been repaid;
b) the particulars of every security (and of the transaction to which it relates) referred to in section 226 (1), which has during the financial year concerned been provided by virtue of the provisions of section 226(2)(a), (b) or (e), including every such security which has during the said financial year been cancelled;
c) the balance outstanding of every loan described in paragraph (a), made at any time before the said financial year and outstanding at the end thereof; and
d) the particulars of every security (and of the transaction to which it relates) described in paragraph (b), provided at any time before the said financial year and still in existence at the end thereof (including, if applicable, the balance outstanding on the said transaction to which it relates).

 

2) If a company which has made a loan or provided any security referred to in subsection (1) is a subsidiary and its holding company is by this Act required to make out group annual financial statements or otherwise to furnish particulars of such subsidiary, there shall be included therein the information provided for in subsection (1).

 

3) Where a loan is a loan of shares, debentures or other property, or where any security is provided in respect of a loan of shares, debentures or other property, the requirements of this section may be complied with by stating the particulars in the directors' report or by way of a note to the annual financial statements.

 

4) If the provisions of this section are not complied with in respect of the annual financial statements of a company, the auditor of the company shall in his report relating to such annual financial statements include a statement containing such information in regard to the matter as he is reasonably able to furnish.

 

5)
a) Any director or manager or past director or manager of a company or of its holding company (if any) or of any other subsidiary of that holding company shall at the written request of the first-mentioned company or its auditor in writing give such information, including particulars relating to his control of a company or body corporate contemplated in section 226(1)(b), as the company or its auditor may require for compliance with the provisions of this section.
b) Any director or manager or past director or manager referred to in paragraph (a) who fails to comply with such request within one month from the date thereof, shall be guilty of an offence.