Section 372a
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
31 December 2012
Kindly advice me as to whether mutual funds are included in the limit of investment under section 372A of the companies act 1956
Ajay Mishra
(Expert)
31 December 2012
Hi
Go to the following link, it may help you:
https://www.legalserviceindia.com/article/l299-Section-372A-of-the-Companies-Act.html
Go to the following link, it may help you:
https://www.legalserviceindia.com/article/l299-Section-372A-of-the-Companies-Act.html
Ajay Mishra
(Expert)
31 December 2012
The word used in the section is “Securities”, it means as defined under Security (contract & Regulation) Act. It is vide definition and covers also, bond, debenture, script, or any other marketable securities of like nature of body corporate and also derivatives and right & interest in the securities. In this context, it can be inferred that warrant / instrument convertible in to shares is also comes under the net of the Section 372A.
Investment in Mutual Fund & Govt. Securities are falls outside Section 372A as the same are not issued by body corporate. Most of the mutual funds are constituted as “Trust” under Indian Trust Act. Such trusts are not body corporate. However investment in units of UTI Mutual fund which are issued by UTI trust company Pvt. Ltd. is well covered u/s. 372A and investment in unit of UTI set up u/s. 3 of Unit trust of India Act, 1963 is also covered u/s. 372A.
The word used in the section is “Securities”, it means as defined under Security (contract & Regulation) Act. It is vide definition and covers also, bond, debenture, script, or any other marketable securities of like nature of body corporate and also derivatives and right & interest in the securities. In this context, it can be inferred that warrant / instrument convertible in to shares is also comes under the net of the Section 372A.
Investment in Mutual Fund & Govt. Securities are falls outside Section 372A as the same are not issued by body corporate. Most of the mutual funds are constituted as “Trust” under Indian Trust Act. Such trusts are not body corporate. However investment in units of UTI Mutual fund which are issued by UTI trust company Pvt. Ltd. is well covered u/s. 372A and investment in unit of UTI set up u/s. 3 of Unit trust of India Act, 1963 is also covered u/s. 372A.
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