does a private company need shareholders approval for investing in shares of another company ?
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 07 May 2010
Hello,
Provisions relating to Inter-corporate Investment are governed by section 372A but this section is not applicable to a private company (Unless subsidiary of a public company).
So no need to take shareholders’ approval. However a board resolution is required to be passed before investment.
Regards
preeti
(asst.cs)
(34 Points)
Replied 07 May 2010
A . company can subscribe for share of another company only to the limit of 60% of its paid-up share capital and free reserves or 100% of the free reserve whichever is more.Above this limit the company has to pass a special resolution in a general meeting.
RITU BAJAJ
(COMPANY SECRETARY)
(158 Points)
Replied 07 May 2010
Dear Preeti,
Mr. Ankur Garg is absolutely right, so kindly rectify yourself & read section 372A carefully.
J. Manivannan
(Advocate & IP)
(242 Points)
Replied 07 May 2010
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