Queries related to investment activity

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Raghavendra K S (Querist)
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03 October 2013 Please give your views for the following queries:

Q1. Can a private limited company be incorporated as Investment Company without registering it as NBFC?

Q2. If not, whether non investment company (company with main objective other than investment) do investment in shares of other company(s)? What is the consequences if investment constitute more than 50 per cent of the total assets and income from such investment constitute more than 50 percent of the gross income?

Q3. In which situation, a non-investment company will become core investment company and it will become deemed NBFC?

Q4. If a non-investment company holds at least 90 per cent of its assets in the form of investments in equity shares, preference shares, debt or loans in group companies, then whether it will be treated as core investment company?

Q5. In question no. 4, if a non-investment company holds at least 90 per cent of its assets in the form of investments in equity shares, preference shares, debt or loans not in group companies(In investment in other company is less than 20%), then what is the consequences?

Q6. Which the best option to start investment business activity along with or without any other business objective?

Abhinaya Kulkarni

Abhinaya Kulkarni (Expert)
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04 October 2013 A1 - you can incorporate a company but you cannot start investment business without obtaining license from RBI.

A2- Penalty for non adhering is imprisonment from 1 to 5 years and fine from rs. 1 to 5 lacks. (cross check)