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CS Professional · Corporate Restructuring, Valuation and Insolvency · Acquisition of Company or Business

Which of the following is correct about the application of section 186 to Prime Capital Ltd, an investment company whose principal business is acquisition of shares, debentures or other securities?

Only sub-section (1), restricting investment through more than two layers of investment companies, continues to apply. Section 186(11) exempts investments made by an investment company from the rest of the section, so the limits and approval requirements do not apply to those investments.

  1. AWhole section 186 is inapplicable to its investments
  2. BOnly sub-section (1) on layers of investment companies continues to apply, while the other provisions do not apply to its investmentsCorrect
  3. CSub-section (2) limits apply but sub-section (1) does not
  4. DSection 186 applies fully except for the penalty provisions

Explanation

Sub-section (11) says nothing in the section, except sub-section (1), applies to investments made by an investment company. So the two-layer restriction in sub-section (1) still applies, while the limits and approvals do not for such investments.

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