Go Ad-Free on CAclubindia with Daily Mobile Updates. Subscribe Now!

Investment Company

CA NEHA AGARWAL (Practise) (227 Points)

23 May 2009

A Private Limited Company is formed with its main objects to trade in Shares & Securities. The Company receives loan from its share holders on 15% interest and trade in shares and securities. Whether the company is under any obligation with RBI or NBFC?

Please reply soon as its very urgent.

Reply
Follow
Share

4 Replies

Milan Somani (CA) (1456 Points)
Replied 23 May 2009

Upgrade to CAclubindia Pro. Subscribe Now!

P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 10 June 2009

You have to get yourself registered with RBI as NBFC. Pl. go through provisions of RBI Act.

Thanks.

Ajay Mishra (Company Secretary) (74337 Points)
Replied 10 June 2009

First of all ur company is a Private Limited company then provisions of section 295 is not applicable.

Secondly your company's main object is trading in securities and not financing to other so it is not a NBFC company. Your companing taking loan with interest is a simple in nature of loan and in that case it is not requied to file any document with RBI unless the director is resident out side India.

Regards

P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 10 June 2009

Extracts from RBI Act:

Section 45-I(c):

“financial institution” means any non-banking institution which carries on as its business or part of its business any of the following activities, namely :—

(i) the financing, whether by way of making loans or advances or otherwise, of any activity other than its own;

(ii) the acquisition of shares, stock, bonds, debentures or securities issued by a Government or local authority or other marketable securities of a like nature;

...................."

^{Section 45-I(f):}

“non-banking financial company” means—

(i) a financial institution which is a company;

(ii) a non-banking institution which is a company and which has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner, or lending in any manner;

(iii) such other non-banking institution or class of such institutions, as the Bank may, with the previous approval of the Central Government and by notification in the Official Gazette, specify.]

[Requirement of registration and net owned fund.

45-IA. (1) Notwithstanding anything contained in this Chapter or in any other law for the time being in force, no non-banking financial company shall commence or carry on the business of a non-banking financial institution without—

(a) obtaining a certificate of registration issued under this Chapter; and

(b) having the net owned fund of twenty-five lakh rupees or such other amount, not exceeding two hundred lakh rupees, as the Bank may, by notification in the Official Gazette, specify.