Investment in related party company

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CS Pooja Thakkar (Querist)
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20 July 2015 One of the pvt Ltd wants to invest in other pvt Ltd, it's related party... I have checked 185,186,188 185 - it's not against loan given 186 - I will be passing SR as it is crossing the required limits 188 - I will be passing ordinary resolution in general meeting. Any other sections I need to check? Pls reply.

Pratik Shah

Pratik Shah (Expert)
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20 July 2015 Hi,

No, you are not checking correct section. Section 188 is for making specified transaction between related party (it does not include Investment).

In your case, only section 186 will be applicable. Hence, if your amount exceeds the limit given in this section, you are required to pass special resolution for the same.
Let me know for any further clarification.

CS Pooja Thakkar

CS Pooja Thakkar (Querist)
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21 July 2015 Hi Pratik,
Thanks for your reply.. what is Sec 188 (1)(g) then? - "underwriting the subscription of any securities or derivatives thereof, of the company."

Also the investor company's 2 Directors (out of 3) & all Shareholders are NRIs. will it affect anyways?

Pratik Shah

Pratik Shah (Expert)
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21 July 2015 Underwriting is very much different.

In the securities industry an underwriter is a company, usually an investment bank, that helps companies introduce their new securities to the market.
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It helps the company (who has issued shares to public) by subscribing to unsubscribed portion of such Issue.

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CS Pooja Thakkar

CS Pooja Thakkar (Querist)
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21 July 2015 Thank you so much Pratik for clarifying.. Thanks once again!

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