pallavi (own) (49 Points)
09 March 2011a public limited company has lot of surplus funds. It is now lending to group cos at bank rate and hence is complying with law. Is this right since there are enough opportunities to lend at higher rates. Moreover the group cos if they independently go to the market to borrow, they will be getting funds only at higher rates, at lest 4-5 % higher than what is getting now from the cash rich co. legally the co si protected. But as a minority shareholder is there anything I can do??
Jayashree S Iyer
(Company Secretary)
(3224 Points)
Replied 10 March 2011
The company can by way of passing a board resolution make investments upto the limits specified in Section 372A (60% of its paid up share capital and free reserves or 100% of its free reserves, whichever is more). So I don't think as a minority shareholder you can do anything till the time the investments are kept within this limit.
Beyond this limit, special resolution passed in the general meeting is required. So if majority shareholders agree, they you can refuse to pass the resolution favouring investments yileding low interest.
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