Section 372a
This query is : Resolved
22 October 2013
A Company has passed a resolution to invest in mutual fund u/s 372A for Rs.2 crore. now the company has invested whole 2 crore in MF, now the company has received Rs. 20 lakh dividend on this MF and the same is re-invested by the company. so my query is that the company violating the section by investing Rs. 2.20 Crore where the resolution is passed for only Rs. 2 crore.
Thanks
Thanks
22 October 2013
Yes, as per resolution passed under section 372A, your limit is specified for this purpose. If you exceed the limit including the current investment with investment made earlier then other resolution will be required.
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22 October 2013
thank you ajay sir for your reply,
but i have one more query that the dividend earned is a revenue income where as the resolution is passed for capital expenditure, so is it right to say that it is crossing the limit ???
thanks
but i have one more query that the dividend earned is a revenue income where as the resolution is passed for capital expenditure, so is it right to say that it is crossing the limit ???
thanks
22 October 2013
Companies Law is not talking about law factor, it only impose on limit to invest.
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22 October 2013
So sir according to you what should be the final conclusion of this, & is there any relevant case law available for this situation.?
Thanks
Thanks
22 October 2013
Please check your shareholder/Board Resolution about the limit of investment.
If such dividend money which is going to invest is with in the above mentioned limit then you can invest such money. Otherwise you again pass resolution for further limit under section 372A.
If such dividend money which is going to invest is with in the above mentioned limit then you can invest such money. Otherwise you again pass resolution for further limit under section 372A.
22 October 2013
My Pleasure..........
22 October 2013
One More thing, Sorry for delay reply:
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.
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.
22 October 2013
One More thing, Sorry for delay reply:
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.
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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23 October 2013
yes sir, in the above case all the investment is made in body corporate only.
23 October 2013
Then its ok.........
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