Loan and Investment by Company | Companies Act 2013 | Section 186

• November 23, 2019
• CA Chandan Agarwal's Office

INTRODUCTION:

The Companies Act, 2013 ( hereinafter known as Act) has come with a change in the theory of “Loan and Investment by Company”. The new Act provides that inter-corporate investments not to be made through more than two layers of investment companies. There was no such provision in the erstwhile Companies Act 1956 (see section 372A of Companies Act 1956).

Subsection 1 of 186 of the Act says that a Company shall make the investment through not more than 2 layers of investment companies.

• Layer as per explanation (d) of Section 2 (87) of the Act in relation to a holding company means its subsidiary and subsidiaries.
• Investment Company means a company whose principal business is the acquisition of shares, debentures or other securities.

Read more on: https://taxguru.in/company-law/loan-investment-company-companies-act-2013-section-186.html