Section 372a

This query is : Resolved

CA. AJAY PANCHARIA (Querist)
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07 September 2013 Respected Experts, CCI
While Calculating Ceiling limit, Should we consider the Required Data(Capital, Free Reserve, Loan etc)
-of Last Audited Balance Sheet
or
-of Balance sheet as on date of proposal

just for example BOD of XYZ ltd, proposed to invest in equity share of PQR ltd on 1st december 2012.
Should we calculate the ceiling limit on the basis of data pertains to last audited balance sheet or balance sheet data as on date of proposal.??

Thanking You

Ajay Panchariya

Ajay Mishra

Ajay Mishra (Expert)
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07 September 2013 Hi

“Free reserve” means those reserves which, as per the latest audited balance sheet of the company, are free for distribution as
dividend and shall include balance to the credit to the security premium account but shall not include share application money. (Paid up capital can be considered as on the date of investment)

(It is not expressly provided that in arriving at the aggregate of the free reserve, the amount of accumulated balance of loss, balance of deferred revenue expenditure and other intangible assets, should be deducted. Capital and debenture redemption reserve is free reserve after redemption of preference shares and debenture respectively.)

CA. AJAY PANCHARIA

CA. AJAY PANCHARIA (Querist)
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07 September 2013 Thank you Sir,
its clear that Reserve should be considered to the extent which exists on latest Audited balance sheet date.

but what about Existing Loan, Investment, Guarantees?? Whether these figures should be considered which exists on latest balance sheet Date or on the Date of Such proposal of making loan/Inv/Guarantee?????

Again Thanks for your Kind Attention.

Ajay Pacnchariya

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