Transfer of funds from one private Ltd company to another

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Kanakarao (Querist)

18 June 2011 Hello every.. can any one help me?.. Our company is a pvt Limited company. It is having two directors who are wife and husband. Recently we incorporated another pvt ltd company with same Managing Director to the new company. But Director are different.. We need funds to new company... we need transfer fund from old company... is it possible... what are the rules to be followed to transfer fund.... Pls I need soluation... RAJU... 9705788628

Jayashree S Iyer

Jayashree S Iyer (Expert)

20 June 2011 There are two ways in which the old company can provide funds to the new company.

1) By subscribing to the shares of the new company. If it subscribes to more than 50% of the shares, the new company will become its subsidiary. Keeping this in mind subscription can be made.

2) It can provide loans to the new company. For limits and provisions relating to inter-corporate loans / investments please refer to Section 372A of the Companies Act, 1956.

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