05 July 2010
A private limited company is converted into public company on 31.03.2010...
Intercorporate Investment were already exceeds the limit of Sec. 372A when it was private company..
Thus 372A was not applicable when it was private company, so no SR were required.. but now it become public company, so whether SR is required for OLD INVESTMENTS ?? if required, then what will be the maximum time limit for this SR ??
Sec 372A says,
(1) No company shall, directly or indirectly,- (a) make any loan to any other body corporate: (b) give any guarantee, or provide security, in connection with a loan made by any other person to , or to any other person, by any body corporate: and (c) acquire by way of subscripttion, purchase or otherwise the securities of any other body corporate,
exceeding sixty percent of its paid -up share capital and free reserve, or one hundred percent of its free reserves, whichever is more
But in this case, the company is neither going to make loan or to give guarantee nor acquiring securities. Act is silent about previous investment's approval.
05 July 2010
The Company should enhance its limits as soon as possible. The ROC will not question the earlier investments. However, the company would not be able to make any new investments. Hence, the best course of action would be enhance the limits suitably.
CAclubindia
