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Sec 295,372A

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Aditya (Querist)
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29 January 2010 Whether investment by a Pub Co. in FCDs of another Pvt Ltd Company covered under Sec 295, if both the Companies have common Directors. Please throw some light on the Compliance part.

Thanks
Adi

Rasesh

Rasesh (Expert)
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29 January 2010 Loan by a public limited company to a private limited company gets covered under SEction 295 if any of the directors of the public limited company is a director or member of the private limited company. If the above holds good in your case, then Section 295 will be hit.

An alternative interpretation could be that FCD is not a loan per se. It is an investment for the public limited company and would not fall under the category of loans and advances. Hence, it is not covered under Section 295.

Aditya

Aditya (Querist)
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30 January 2010 Thanks Mr Shah.
In fact it is an investment by nature.How to substantiate this alternative interpretation is my actual problem. So kind of you if you can suggest any precedent.

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