23 March 2011
Company-A invested in the Preference Share of Company-B and in turn Company-B wants to invest in Preference Shares of Company A, whether this cross holding of Shares in two Companies is OK.
For your clarification both the companies are Unlisted Public Companies.
23 March 2011
A Company is not allowed to invest in its own shares unless by a manner which leads to cancellation / reduction of capital. This cross-holding, if proved, would lead to cancellation of shares issued by both the companies. Please refer Sec 77.
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