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    Question

    As per Section 186 of the Companies Act 2013, n o

    company shall directly or indirectly , give a loan, any guarantee or provide security in connection with a loan t o any other body corporate or person , acquire by way of subscription, purchase or otherwise, the securities o f any other body corporate , exceeding _________ of its paid-up share capital , free reserves  and securities premium account or 100% of its free reserves and securities premium account, whichever is more.  
    A 50% Correct Answer Incorrect Answer
    B 60% Correct Answer Incorrect Answer
    C 70% Correct Answer Incorrect Answer
    D 80% Correct Answer Incorrect Answer
    E 85% Correct Answer Incorrect Answer

    Solution

    Section 186. Loan and investment by company   (1 )  Without prejudice to the provisions contained in this Act, a company shall  unless otherwise prescribed, make investment through not more than two layers of investment companies:   Provided  that the provisions of this sub-section shall not affect,—   ( i ) a company from acquiring any other company incorporated in a country outside India if such other company has investment subsidiaries beyond two layers as per the laws of such country;   ( ii ) a subsidiary company from having any investment subsidiary for the purposes of meeting the requirements under any law or under any rule or regulation framed under any law for the time being in force.   (2) No company shall directly or indirectly —   ( a ) give any loan to any person or other body corporate ;   ( b ) give any guarantee or provide security in connection with a loan to any other body corporate or person; and   ( c ) acquire by way of subscription, purchase or otherwise, the securities of any other body corporate,   exceeding sixty per cent of its paid-up share capital ,  free reserves  and securities premium account or one hundred per cent. of its free reserves and securities premium account, whichever is more.  

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