Investment by Private Limited company

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A private limited company in India can invest in shares and mutual funds if its Memorandum of Association (MOA) permits such activities. If the company's primary object is consultancy, investing may not be directly allowed without specific clauses. For alternative investments like FDs or mutual funds, it generally depends on the profit ratio, and may require NBFC registration or trading in derivatives.

DIVYESH JAIN

DIVYESH JAIN (Querist)

16 December 2021 Dear Sir,

Can a private limited company who deals in manpower consultancy business invest in shares or mutual funds just like an individual person. Are there any restrictions.

What will the Taxation impact if shares or mutual funds are sold in future years.

Please help me in this matter.

Regards,
Divyesh Jain

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

19 December 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.
If its objects includes activity of investing and trading then, such private limited company can invest in stocks.

DIVYESH JAIN

DIVYESH JAIN (Querist)

31 January 2022 The object clause of the company states that the company provides consultancy services. There is no separate clause for investing by the company.

Can the company invest in FD or Mutual funds instead of keeping the amount in Bank.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

31 January 2022 Generally no. It depends upon its profit ratio from such investment. Either it has to register as NFBC, or it can trade only in derivatives.

DIVYESH JAIN

DIVYESH JAIN (Querist)

31 January 2022 Ok, Thanks for your reply

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

01 February 2022 My Pleasure ...

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