Section 186 of CA 2013 : Section 186: Loan And Investment By Company
CA 2013
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Explanation using Example
Imagine a scenario where XYZ Pvt. Ltd., a manufacturing company, is planning to expand its business operations. The board of directors considers making an investment in a new subsidiary, ABC Manufacturing Ltd., and also providing a loan to another company, LMN Traders Ltd., for mutual business interests.
According to Section 186 of the Companies Act, 2013, XYZ Pvt. Ltd. must ensure that:
- The investment in ABC Manufacturing Ltd. does not create more than two layers of investment companies.
- The loan to LMN Traders Ltd., along with any guarantee or security provided, does not exceed 60% of XYZ Pvt. Ltd.'s paid-up shar...
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