company law query

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Guest

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25 March 2011 Can a company invest its paid up capital and free reserves into another company

Aditya Maheshwari

Aditya Maheshwari (Expert)
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25 March 2011 Private limited company can invest any amount after passing necessary resolution by the board.

For public company the limit is 60% of paid up capital + free reserves or 100% of free reserves whichever is higher.

If more investments needs to be made then autorisation from shareholder required as mentioned in section 372A.

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Jayashree S Iyer

Jayashree S Iyer (Expert)
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26 March 2011 I believe the company is into some business activity. If it is only engaged in investment activity, then it may become an investment company attracting NBFC regulations.

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Guest

Guest (Querist)

27 March 2011 my question was not that how much a company can invest in another company,but my question was, can a company use its paid up capital and free reserves to invest it into another company?

Jayashree S Iyer

Jayashree S Iyer (Expert)
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28 March 2011 Yes, it can, but only subject to the limits specified in Section 372A. Again if the activity is only investment, it will attract NBFC provisions.