Investment by public limited company in another company

This query is : Resolved

Mukesh Kumar Tiwari (Querist)
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18 December 2008 As per Sec-372A, A public limited company can not make investment exceed the prescribed limit under that section.
Can it possible that a public limited company invest 100 % of Paid up capital in another company by passing special resolution in EGM ?
Please site suitable case laws, if any,in reference of this provision.
If there any difference if investee company is infrasture company or Pvt. lmited ?

CS Arpita Rajpurohit

CS Arpita Rajpurohit (Expert)
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18 December 2008 The board of directors of a company are permitted to make inter-corporate loans and investments or to give guarantee/provide security, provided aggregate amount thereof does not exceed 60% of its paid up share capital and free reserves or 100% of its free reserves, whichever is more, subject to fulfilment of the following conditions, namely, A resolution shall be passed to the above effect at a meeting of the board with the consent of all the directors present at the meeting.

However,Provided that where the aggregate of the loans and investments so far made, the amounts for which guarantee or security so far provided to or in all other bodies corporate, along with the investment, loan, guarantee or security
proposed to be made or given by the Board, exceeds the aforesaid limits, no investment or loan shall be made or guarantee shall be given or security shall be provided unless previously authorised by a special resolution passed in a general meeting.

Thus, the board can make 100% invt. by passing a res. in EOGM.

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