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CS Executive · Setting Up of Business, Industrial and Labour Laws · Corporate Entities - Companies

Gramin Millets Producer Company Ltd has paid-up capital of ₹60 lakh and free reserves of ₹40 lakh. It wants to invest, by itself and with its subsidiaries, in shares of a company that is not a Producer Company. What is the limit without special approval?

The limit is ₹30 lakh. A Producer Company, with its subsidiaries, may invest in other non-Producer companies up to thirty per cent of the aggregate of paid-up capital and free reserves, here 30% of ₹100 lakh, unless it gets special approval.

  1. A₹20 lakh
  2. B₹30 lakhCorrect
  3. C₹40 lakh
  4. D₹60 lakh

Explanation

The investment limit is 30% of the aggregate of paid-up capital and free reserves. Aggregate = 60 + 40 = ₹100 lakh; 30% = ₹30 lakh. ₹20 lakh wrongly uses 20%, ₹40 lakh uses only reserves, and ₹60 lakh uses only paid-up capital.

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