Varun (ACA CS Final Pass B.Com(H)) (270 Points)
17 June 2015I wish to know, whether the amount appearing in Balance Sheet under Investments (classified under Current Assets) be considered (i.e. deducted) while computing "effective capital" under Sch. V of Companies Act, 2013 for the purposes of determination of maximum managerial remuneration?
or, do we just deduct non-current investments?
P C Agrawal
(Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad)
(8229 Points)
Replied 21 June 2015
Refer Explanation-I in Section IV. All investments (except in case of investment by an investment company whose principal business is acquisition of shares, stock, debentures or other securities) have to be reduced.
Srividya Murali
(Article Assisstant)
(211 Points)
Replied 26 June 2015
Effective capital is that part of total capital which is solely invested in your business. To put in other way it is net of investments made outside the business of the entity. hence investments outside the business must be deducted.
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