Can a private limited company invest in shares

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A private limited company can invest in shares, bonds, and securities if its Memorandum of Association permits investment activities. Delivery-based share trading and investments are allowed subject to company object clauses and compliance requirements.

lalit

lalit (Querist)
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01 April 2021 A private limited company was set up for manufacturing business with authorized and paid up capital of INR 25 Lakhs.
The manufacturing business has been closed down.
Bank interest has come to all time low.
Can now the share capital be used for investing in shares/bonds, i.e, buying delivery (not intraday trading) in demat account and selling as and when their prices go up, which can happen in days, weeks and or months.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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01 April 2021 Yes, a private limited company can trade and invest in shares of any public company in India if its Memorandum of Association allows such investing.

The Memorandum of Association contains a clause called “Object Clause” which set out the object for which the company has been framed. If its objects includes activity of investing and trading then, such private limited company can invest.

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