I wish to know, whether the amount appearing in Balance Sheet under Investments (classified under Current Assets) be considered (i.e. deducted) while computing "effective capital" under Sch. V of Companies Act, 2013 for the purposes of determination of maximum managerial remuneration?
or, do we just deduct non-current investments?
Refer Explanation-I in Section IV. All investments (except in case of investment by an investment company whose principal business is acquisition of shares, stock, debentures or other securities) have to be reduced.
Effective capital is that part of total capital which is solely invested in your business. To put in other way it is net of investments made outside the business of the entity. hence investments outside the business must be deducted.
Gupta Sachdeva & Co. Chartered Accountants
New Delhi
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