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TMI BlogInter‑corporate investments ‑ In excess of limits ‑ Scope of the section clarified and explainedX X X X Extracts X X X X X X X X Extracts X X X X ..... clarified and explained 1. Previous approval of the company in general meeting and of the Central Government is required to be obtained before a company invests in the shares of another body corporate in excess of the limits prescribed in the section. As the Central Government will not accord ex post facto approval to any investment attracting section 372(4), any such investment made withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idiaries must also be taken into account. 4. For purposes of calculating the prescribed limit of 20 per cent or 30 per cent of the subscribed capital of the investing company, the actual cost of the investments (and not the nominal value of the shares to be purchased or subscribed) is to be taken into account; the limit of 10 per cent of the subscribed capital of the investee company is, how ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Government under section 373 even if the percentage limits prescribed in section 372(2) had been exceeded. Nor would a company be required to dispose of any of the said investments so as to conform to the said percentage limits. Such investments will, however, have to be taken into account for purposes of computing the aggregate of the investments as provided in sub‑section (3) of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich are held by such companies as part of stock‑in‑trade will be hit by the restrictive provisions of section 372. The limit of 30 per cent applies to all investments by a company in the share of any other body corporate, irrespective of whether such shares are held for short or long periods or as long‑term investment or for sale or purchase. Investment companies, however, will ..... X X X X Extracts X X X X X X X X Extracts X X X X
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