Trading in Shares
This query is : Open
01 July 2009
Can a private limited company has its main objects as trading in shares? whether it is considered as NBFC? Does it require any specific santion / capital requirements before commencement? Or else the treatment is same as any other private limited company?
01 July 2009
1.Pvt Co can have trading in shares as its main objects.
2.Refer Sec.45-I of RBI Act,1934 for definitions of business of NBFC. It excludes a company which has, industrial activity/trading in goods/providing services etc., as its principal business. Hence if it has only trading in shares as principal business it will be considered as NBFC. Also refer RBI Notification DNBS (PD) C.C. No. 81/03.05.002/2006-07 dated 19th October, 2006, which says if financial assets>50% of total assets and financial income >50% of total income, then its an NBFC
3.If it is an NBFC, it has to get registered with RBI. Refer Sec.45-IA
Hope this clarifies your doubt.
Regards
N.Gopal.
Industrial Trainee
2.Refer Sec.45-I of RBI Act,1934 for definitions of business of NBFC. It excludes a company which has, industrial activity/trading in goods/providing services etc., as its principal business. Hence if it has only trading in shares as principal business it will be considered as NBFC. Also refer RBI Notification DNBS (PD) C.C. No. 81/03.05.002/2006-07 dated 19th October, 2006, which says if financial assets>50% of total assets and financial income >50% of total income, then its an NBFC
3.If it is an NBFC, it has to get registered with RBI. Refer Sec.45-IA
Hope this clarifies your doubt.
Regards
N.Gopal.
Industrial Trainee
01 July 2009
For trading in shares besides following RBI guiidelines, one has to register with SEBI as a stock broker and with the stock exchange as its member. Stock exchanges have their own eligibility criteria for admission as a member. You may refer the websites of National stock exchange of india ltd and bombay stock exchange. Even SEBI has criteria for fit and proper person regulations.
Ruchira
Advocate
Ruchira
Advocate
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