Ministry of Corporate Affairs – Companies (Meetings of Board and its Powers) Amendment Rules, 2025
The Ministry of Corporate Affairs (MCA) has issued a pivotal amendment through G.S.R. 811(E), redefining the scope of “business of financing industrial enterprises” under Rule 11 of the Companies (Meetings of Board and its Powers) Rules, 2014. This amendment carries significant implications for the applicability of Section 186 of the Companies Act, particularly concerning exemptions granted to lending and financing entities.
At the heart of this development lies an intent to remove long-standing ambiguity surrounding which financial institutions qualify for exemption from stringent limits on loans, guarantees, and securities. Under Section 186(11)(a), entities engaged in the “business of financing industrial enterprises” are exempt from these restrictions, but the phrase remained loosely interpreted for years.
The amendment brings two major clarifications. First, it recognizes that Non-Banking Financial Companies (NBFCs) registered with the Reserve Bank of India inherently engage in financing activities and, therefore, their ordinary business of providing loans, guarantees, or security falls squarely within the protected category. Second, the rule now expressly includes Finance Companies registered with the International Financial Services Centres Authority (IFSCA), by aligning their permitted activities under the IFSCA (Finance Company) Regulations, 2021 with the statutory exemption.
This regulatory move signals a progressive shift toward harmonizing corporate law with financial sector regulations. By clarifying the definition, the MCA has provided long-awaited certainty for NBFCs and IFSCA-regulated entities, easing compliance and supporting efficiency in credit-linked operations. It removes interpretational disputes and ensures smoother applicability of Section 186 in practice.
The amendment’s significance lies in boosting financial sector fluidity while maintaining transparent governance norms. As India continues to strengthen its financial infrastructure, especially within GIFT City, this clarification is expected to streamline business operations and foster a more predictable regulatory environment for lending institutions across the board.