The Industrial Finance Corporation Act, 1948
26. Prohibited business.
- *The Corporation shall not -
- accept deposits except as provided by this Act;2* * * * * *3*[(c) grant any loan or advance on the security of its own shares.]4*
- [The Corporation shall not enter into any kind of business with any industrial concern of which any of the Directors of the Corporation is a Director, manager, agent, employee or guarantor or in which one or more Directors of the Corporation together hold substantial interest;
Provided that this sub-section shall not apply to any industrial concern if any Director of the Corporation -
- is nominated as a Director on the Board of such concern by Government, or a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956), or by a Corporation established by any other law, or
- is elected on the Board of such concern by virtue of shares held in the concern by Government, or a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956), or by a Corporation established by any other law, by reason only of such nomination or election, as the case may be.
- Renumbered by Act 74 of 1972, s. 14.2. Cl. (b) and the proviso omitted by Act 66 of 1960, s. 7.3. Ins. by Act 78 of 1952, s. 15.4. Ins. by Act 74 of 1972, s. 14.54.Explanation.-"Substantial interest", in relation to an industrial concern, means the beneficial interest held by one or more of the Directors of the Corporation or by any relative [as defined in clause (41) of section 2 of the Companies Act, 1956] (1 of 1956) of such Director, whether singly or taken together, in the shares of the industrial concern, the aggregate amount paid-up on which either exceeds five Lakhs of rupees or five per cent. of the paid-up share capital of the industrial concern, whichever is less.(3) The provisions of sub section (2)-
- shall not apply to any transaction relating to the business entered into prior to the commencement of the Industrial Finance Corporation (Amendment) Act, 1972.(74 of 1972), and all such business and any transaction in relation thereto may be implemented or continued as if that Act had not come into force;
- shall apply only so long as the conditions precedent to such disability as set out in the said sub-section continue.]
- 1*shall not apply to any industrial concern in respect of which the Corporation is satisfied that it is necessary, in the public interest, to enter into business with that concern:
Provided that such business shall be entered into in accordance with and subject to such conditions and limitations as may be prescribed by regulations made in this behalf.]