188.
| (1) No company shall grant a loan to any person who is its director or a director of its holding company, or to enter into any guarantee or provide any security in connection with a loan granted to such a person by any other person: |
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| (2) The provision of paragraph (b) of the proviso to subsection (1) shall not authorize the making of any loan, or the entering into any guarantee or the provision of any security, unless-
| | (a) with the prior approval of the company given at a general meeting at which the purposes of the expenditure and the amount of the loan or the amount of the guarantee or security, as the case may be, are disclosed; or | | |
| | (b) on condition that, if the approval of the company is not given as aforesaid at or before the next following annual general meeting, the loan shall be repaid or the liability under the guarantee or security shall be discharged, as the case may be, within six months from the date of conclusion of that meeting. | | |
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| (3) Where the approval of the company is not given under the provisions of subsection (2), the directors authorizing the making of the loan, or the entering into the guarantee, or the provision of the security, shall be jointly and severally liable to indemnify the company against any loss arising therefrom. |
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Sri Lanka Consolidated Acts