Dear All,
I have a querry regarding allotment of shares,
A and B are two private companies, A's paid up capital is 2 crores gave a 2 lacs loan to B, with that money B purchased shares in A Company, (There are no common directors or shareholders in two companies)
A is showing in its balance sheet as loan to B
B is showing is its balance sheet as investment in A
Does this transaction is valid.
As per my understanding there is no restriction in companies Act, 1956, are there any other provisions restricting this transaction.
CAclubindia
