Corporate Guaranty

Corporate Guarantee does not create any Charge per-se, unless mortgage or hypothecation etc is created on assets/undertaking.

Guarantee can refer to the agreement itself as a noun, and the act of making the agreement as a verb. Guaranty is a specific type of guarantee that is only used as a noun.

As per Section 186 a company cannot give any loan or guarantee or provide security in connection with a loan to any other body corporate or person: exceeding sixty per cent. of its paid-up share capital, free reserves and securities premium account or one hundred per cent.

1 : an undertaking to answer for the payment of a debt or the performance of a duty of another in case of the other's default or miscarriage. 2 : guarantee sense 3. 3 : guarantor. 4 : something given as security (see security sense 2) : pledge used our house as a guaranty for the loan.

A corporate guarantee is a legal agreement between a borrower, lender, and guarantor, whereby a corporation (e.g., an insurance company) takes responsibility for the debt repayment of the borrower provided it faced bankruptcy.

A corporate guarantee is used when a corporation agrees to be held responsible for completing the duties and obligations of debtor to a lender, in case the debtor fails to comply with the terms of the debtor- lender contract.

Guarantee is a security in form of a right of action against a third party called the surety or the guarantor. In simple terms, a Guarantee means the promise to pay another's debt or fulfill another person's contractual obligation, if that other person fails to pay his debt or perform his obligation.

The main difference between a bank guarantee and corporate guarantee is, in a bank guarantee the bank is providing assurance for repayment in defaults but in a corporate guarantee, the guarantor has the responsibility of repayment in defaults.